KOREA FOCUS - May 2012

Table of Contents

Korea Focus - May 2012 - TOC - Politics 1. North Korea’s ‘Satellite Launch’: A Balance Sheet 2. When We Have an Ethnic Sri Lankan Represent Korea 3. Projection of the Seoul Nuclear Security Summit 4. Lessons from the Cheonan’s Demise 5. Civic Movement Put to Test - Economy 1. Preconditions for Korea-China FTA 2. Structural Change in Income Distribution 3. The Right Course of Chaebol Reform 4. Water Stress in Korea 5. The Economic Korean Wave in Japan - Society 1. Reasons to Record and Remember North Korea’s Tragic Human Rights Situation 2. How to Make the ‘Korean Legend’ Continue 3. Heroes Who Built the Ieodo Ocean Research Station 4. Truth about Gureombi Rock - Culture 1. Harmony of Peace from Paris 2. K-pop into the China Market 3. Historian Lee Ki-baek and Publisher Kim Seong-jae 4. Bread over Books, Shoes over Books? 5. Making Friends in Seoul - Essay 1. North Korea’s External Debts: Trend and Characteristics

2. North Korea’s Economic System in the Kim Jong-un Era: Prospects for Change and Implications 3. Polarizing Business Competitiveness 4. Korean Movies from True Stories: Reality and Desire for Myth - Feature 1. Activist Asserts the Lives of North Korean Defectors Should Come ahead of Ideology 2. Architectural Hallyu Attracts Young Architects from Abroad - BookReview 1. Rethinking the Theories on North Korea’s Demise 2. Koreans, It’s Time to Lead, Not Follow - Interview 1. Stephen Linton: “I have inherited the gene of 100-year-long love toward Korean people.” - COPYRIGHT

- North Korea’s ‘Satellite Launch’: A Balance Sheet

- When We Have an Ethnic Sri Lankan Represent Korea

- Projection of the Seoul Nuclear Security Summit

- Lessons from the Cheonan’s Demise

- Civic Movement Put to Test

North Korea’s ‘Satellite Launch’: A Balance Sheet

Han Sung-joo Professor Emeritus, Korea University Former Minister of Foreign Affairs

In spite of mounting criticism and dissuasion by its neighbors and the

international community, North Korea obviously intends to proceed with its

announced rocket launch in mid-April, supposedly to put a space satellite,

Kwangmyongsong-3, into orbit. (Editor’s Note ―The North’s rocket exploded

a few minutes into its flight on April 13.)

Pyongyang insists that it is acting in accordance with the wishes of the late

leader Kim Jong-il. That is, the launch is for peaceful purposes and part of the

centennial celebration of the birth of Kim Il-sung, who founded North Korea.

The North also claims that it informed the United States of the satellite launch

when it was negotiating an agreement for food aid. Under a deal reached on

February 29, Pyongyang vowed to freeze its uranium enrichment program

(UEP) and the United States promised food shipments.

The general consensus is that the rocket launch was meticulously calculated

and prepared while Kim Jong-il was alive and is not the byproduct of internal

conflict and confusion since his death. Still, the North stands to suffer a

backlash. The launch will deepen its international isolation and worsen already

grim prospects of resolving its economic woes.

For North Korea, the primary purpose of developing and test-firing long-range

rockets is to produce intercontinental ballistic missiles (ICBM) capable of

reaching the continental United States. But there also are political and

diplomatic objectives attached. First, Pyongyang intends to demonstrate to the

outside world a stable power transition in progress from Kim Jong-il to his

son, Jong-un. Second, by resisting international calls for a halt in the missile

program, it is committed to intensify the solidarity and unity of the North

Korean populace. Third, a hard-line faction presumably led by military forces

may be intent on creating obstacles in the six-party negotiations over the

North’s nuclear and missile programs to extract more concessions from the

United States and other nations.

The North must also be counting on the launch to gain momentum for

accelerating the development of missiles with nuclear warheads. Pyongyang

conducted its first nuclear test three months after the test-firing of Taepodong-

2 ballistic missile in 2006 and a second nuclear test a month after the

launching of a missile supposedly carrying the Kwangmyongsong-2 satellite in

2009.

While North Korea pursues these objectives, the five other countries in the six-

party talks are entangled in their own political transition. This is curbing their

influence on a wayward Pyongyang or their ability to take tough measures.

Russia will be left hamstrung until early May when president-elect Vladimir

Putin will be sworn into office. China, due to change its top leadership this

autumn, will have little options to reassess its policy toward North Korea until

new leaders are seated. Japan, stricken by frequent cabinet changes over the

past six years, is overwhelmed by domestic political, economic and natural

disaster issues so it can hardly pay close attention to foreign affairs. Both

South Korea and the United States are mired in election campaigns – Korea’s

general election at hand and the presidential elections of both countries in the

fall – so they find it difficult to divert much attention to North Korea.

Taking advantage of these transitional developments in other countries,

Pyongyang is employing a “carrot and stick” tactics of its own. That is, on the

one hand, it displays its willingness to resume the stalled six-party talks,

proposing to freeze its UEP and promising to readmit International Atomic

Energy Agency (IAEA) inspectors. On the other hand, the North is committed

to its long-range missile launch, posing a provocative challenge to the

international community. Its double-edged ploy hinders policy coordination

among other parties of the six-way talks, especially Seoul and Washington.

Beijing is displeased with Pyongyang’s nuclear and missile development, but

it does not want North Korea to implode or to see a military clash flare up on

the Korean peninsula. Therefore, while it expresses concerns about the North’s

“satellite launch,” China will deliberately accede to Pyongyang’s vindication

and oppose additional sanctions against North Korea, trying to resume the six-

party negotiations. If the United States halts its food aid, the North will refuse

to freeze its UEP and the reentry of IAEA inspectors, passing the buck to

Washington. The scrapping of the February 29 agreement would end up with

failing to prevent Pyongyang from conducting its missile launch and letting it

continue uranium enrichment. In return, North Korea will not get food

assistance, but it can claim its might and prestige have been upheld, gaining an

excuse to keep up its nuclear and missile development programs.

Accordingly, the North Korean leadership may believe that the long-range

missile launch would lead to more gains than losses for them. In actuality,

however, the North will lose not only 240,000 tons of U.S. food aid but also

opportunities for economic cooperation with other countries, further increasing

its economic dependence on China. With the latest “satellite” issue,

Pyongyang has placed a tremendous political and diplomatic burden on

Beijing. What’s more, China has been reminded once again that the North’s

nuclear weapons and missiles can threaten it. Although China is supporting

and defending North Korea for now, it is quite possible that Beijing would

eventually change its position at a certain stage.

The North’s latest move has also intensified international attention and

concerns about North Korea’s weapons of mass destruction. The Nuclear

Security Summit in Seoul, which North Korea criticized, originally had no

plans to discuss the North’s nuclear weapons and missiles. But Pyongyang’s

announcement put the issue at the top of the summit agenda. By dashing the

expectations of the international community and choosing to isolate itself

further, North Korea is only increasing the insecurity of Kim Jong-un’s

fledgling regime.

[Chosun Ilbo, April 6, 2012]

www.koreafocus.or.kr

When We Have an Ethnic Sri Lankan Represent Korea

Kang In-sun International News Editor The Chosun Ilbo

U.S. President Barack Obama last week nominated Jim Yong Kim, president

of Dartmouth College, to be the next president of the World Bank. The World

Bank is an international organization that spends tens of billions of dollars

annually to assist developing countries. Announcing Kim’s nomination,

Obama said, “His experience makes him ideally suited to forge partnerships all

around the world.” Kim was born in Korea and grew up in the United States,

and has worked in various parts of the world, including Asia and Africa. “His

personal story exemplifies the great diversity of our country,” Obama said.

Initial candidates for the World Bank presidency had included internationally

renowned elites from the United States, such as Secretary of State Hillary

Clinton, Columbia University Professor Jeffrey Sachs, Senator John Kerry,

and former Harvard University President Lawrence Summers. Kim was

nominated due reportedly to the U.S. government's consideration for

international politics. Obama acted cleverly by nominating a “Korean

American” amid broad demand from developing nations for someone outside

the United States. Traditionally, the World Bank presidency has been filled by

an American while the International Monetary Fund is led by a European. As

expected, China welcomed Kim’s nomination and other newly emerging

economies did not raise objections.

In fact, when Kim’s nomination was first reported, many people wondered

about his background. But they nodded their heads after hearing Obama’s

remarks. Kim, a naturalized U.S. citizen, started as a medical doctor, but has

had a diversified career based on his experience in various regions and sectors.

Diversity, which few Americans have, has now become his competitive edge

with which he can persuade the international community.

The United States used to be called a “melting pot” because it brought

diversity together. But the country is now called a “salad bowl,” which means

it is a mixture of many different cultures maintaining the characteristics of

individuals and minorities. The United States has a competent candidate like

Kim because the “salad bowl” is functioning properly. The country has a long

history of bitter discrimination against minorities, ethnic and social, but the

experience has created a lot of room to admit differences and to give

individuals chances to develop themselves.

Korea is also a multicultural society nowadays. It has about 100,000

naturalized citizens, with some 10,000 foreigners becoming Korean citizens

every year. Marriage immigrants living in Korea amount to some 210,000,

with about 150,000 children born to them. In addition, some 30,000 couples tie

the knot in international marriages annually. The nation has nearly 1 million

long-term foreign residents.

The scope of Korean nationality continues to be expanded. In spite of their

appearance, some Koreans have significantly different ways of thinking

because they have stayed overseas for a long time studying. Conversely,

despite their appearance, many people born in multicultural families have truly

Korean ways of thinking and living. We also have citizens who have defected

from North Korea.

Korea is changing little by little, embracing multicultural trends. Even “mixed-

blood” people with “distinguishable” appearances can serve in the Army and

become police officers. Military authorities decided to use the term “people”

instead of “nation” in the oath of enlistment.

Nonetheless, we should take a step further: create the space where all Koreans

of diverse descents can preserve their individual characteristics and cultural

identity. They will transfuse diverse blood into Korea and take it to a higher

level. More talented Koreans can be born and grow up in such a diverse

environment. The day will soon come when the Korean president talks about

“the great diversity of our country,” as Korea takes the lead in launching a new

international organization and nominates a Danish Korean or a Sri Lankan

Korean to be its chief.

[Chosun Ilbo, March 28, 2012]

www.koreafocus.or.kr

Projection of the Seoul Nuclear Security Summit

Ahn Yin-hay Professor Graduate School of International Studies Korea University

“Katchi kapshida!” (“We go together”) U.S. President Barack Obama declared

in concluding his speech at the Hankuk University of Foreign Studies in Seoul

on March 26. Delivered on the sidelines of his participation in the 2012

Nuclear Security Summit, Obama’s address, together with his trip to the

Demilitarized Zone partitioning the Korean peninsula a day earlier, was to

reaffirm the solid alliance between South Korea and the United States and his

commitment to sustaining world peace. Attending the speech as a guest at the

university’s jam-packed auditorium, I was deeply impressed by his emphasis

on the vital need for global partnership, sharing insightful wisdom and

stepped-up efforts, in seeking a world free of nuclear threats.

Like the first Nuclear Security Summit held in Washington two years ago, the

guiding theme of the Seoul conference was the prevention of nuclear

terrorism. Another main issue was nuclear safety, prompted by Japan’s atomic

reactor accident caused by a devastating earthquake and tsunami in March last

year. The dual goals of quashing the threat of nuclear terrorism and

strengthening safety in peaceful uses of nuclear energy are indeed essential in

the establishment of international nuclear security. But then, they only

constitute part of far-reaching efforts in pursuit of a “world free of nuclear

weapons,” a grand vision of the 21st century, which is being challenged by

such drawbacks as dubious nuclear developments by North Korea and Iran.

On February 28-29, the Korean Association of International Studies hosted an

international conference in Seoul under the theme of “Establishment of a

Global Nuclear Security Regime and Prospects for Nuclear Security Issues in

East Asia.” Invited to the conference as keynote speakers were Park Geun-hye,

the head of the governing Saenuri Party, and Han Myeong-sook, the leader of

the opposition Democratic United Party. They presented conservative and

progressive views of nuclear security, respectively, revealing a wide gap in

their perceptions.

Ms. Park expounded that North Korea’s possession of nuclear arms poses an

issue that should never be overlooked, and on that principle, concerned parties

need to make concerted efforts toward building up mutual confidence. On the

other hand, the opposition leader asserted that an aggravation of the North

Korean nuclear issue has stemmed from the Lee Myung-bak administration’s

hard-line policy toward the North. While inter-Korean relations have been

strained, intermittent efforts have been made to resume the long-stalled six-

party talks on North Korea’s nuclear question. But Pyongyang is hardly

expected to renounce its nuclear ambition. To be sure, the North has publicly

stated that it would never give up its satellite launch, calling it a requisite for

economic development.

With the participation of top leaders from 53 countries and four international

organizations, the Seoul Nuclear Security Summit served itself as the largest

summit assembly for multilateral cooperation next to the United Nations

General Assembly. While hosting the two-day conference, South Korea

conducted 23 bilateral summit talks, nine meetings of prime ministers and 12

sessions of foreign ministers, demonstrating its extensive diplomatic outreach.

In addition to its role in global economic issues exemplified in 2010 when it

hosted a G20 summit in Seoul, South Korea has now taken initiatives in the

sphere of diplomacy and international security as well.

Summing up their debate, participants in the second Nuclear Security Summit

unanimously adopted the Seoul Communiqué which, among other points,

called on nations to accelerate their domestic approval of the Convention on

the Physical Protection of Nuclear Material (CPPNM), as amended in 2005 to

strengthen protective measures at nuclear facilities, so as to put it into force by

2014. The summit acknowledged the progress made in plutonium disposal

plans, pledged in 2010 and thence implemented by the United States and

Russia, and some other tangible results of the Washington summit.

Notwithstanding, the communiqué is non-binding and lacks specific steps for

reducing plutonium and highly enriched uranium that can be used to produce

nuclear weapons.

With regard to North Korea’s controversial plan to launch a long-range rocket,

the United States and China were in unison in expressing their concerns.

However, they differed in their approach to attaining nuclear security. While

President Obama called on other nations taking part in the conference to

further reduce their stockpiles of nuclear material, President Hu Jintao stressed

that, even though he fully agreed to the importance of nuclear security, the

rights of developing countries to utilize nuclear energy for peaceful purposes

should not be restricted and that reduction of nuclear material has to be

enforced through voluntary actions.

The Seoul summit was instrumental in universally underscoring the

importance of nuclear security and safety and setting the direction of resolving

nuclear questions through global governance of multilateral cooperation.

Because the biennial summit is a forum of top political leaders of world

nations, sustained efforts have to be made to explore ways to keep on

mobilizing political momentums in dealing with nuclear problems. The third

summit due to be held in the Netherlands in 2014 is expected to take concrete

next steps in realizing a “world free of nuclear threats.”

[Dong-a Ilbo, March 29, 2012]

www.koreafocus.or.kr

Lessons from the Cheonan’s Demise

Park Sung-choon Minister of Patriots and Veterans Affairs

Every day, a mother appears at the Daejeon National Cemetery to visit the

graves of the sailors of the Cheonan, a Navy corvette sunk by a North Korean

torpedo on March 26, 2010. She wipes the tombstones of all 46 fallen sailors.

One of them is her son, Chief Petty Officer Lim Jae-yeop.

For the 30 days, from the moment the naval ship went down until its shredded

stern was salvaged, the families of the sailors spent nights in tears, hoping that

their sons or husbands would come back alive. The entire nation was of one

mind wishing for the safe return of all sailors. But none of the 46 missing men

survived. There was another tragic death: Warrant Officer Han Joo-ho died

after diving ceaselessly into the cold water to search for the missing crew. This

brave Navy officer, who showed an example of the noble spirit of sacrifice,

was also laid to rest in the same cemetery.

Two years on, the name “Cheonan” seems to be a dim memory among many

people and their worries about another provocation from the North seem to be

dissipating little by little. But the security conditions facing the Republic of

Korea don’t seem any better than when the Cheonan was torpedoed. Far from

apologizing for its sinking of the ship, the North shelled Yeonpyeong Island in

November the same year even before the pain of the bereaved families of the

fallen sailors and the people was healed.

Moreover, in a joint New Year’s editorial this year, the North Korean regime

made clear once again that it will usher in a “strong and prosperous socialist

state.” Many pundits are warning of the high possibility of the regime staging

another military provocation against the South this year. The Republic of

Korea is now at a more crucial juncture than ever as far as its security is

concerned. Now is the time to break the vicious cycle of the North attacking

the South and of the South falling victim.

In order to defend the future of our young generation and the Republic of

Korea, the nation acutely needs a strong sense of security as well as a full

military preparedness. We need, first of all, to become internally united and

stronger to maintain peace. What the Republic of Korea requires at this

moment is a correct understanding of its security reality and clear judgment of

necessary steps to improve national security, rather than vaguely emphasizing

the importance of security.

The key to the Republic of Korea’s security is its alliance with the United

States. What is particularly important is that our young generation should have

a correct understanding of the Korea-U.S. alliance, which has served as a

foundation for the security and economic growth of the Republic of Korea,

and of the North Korean regime’s strategy to seek disintegration of the

alliance. And the Republic of Korea should never be swayed by any threat

from the North in the future. This is how we can make sure that the lessons left

for us by all fallen patriots and heroes, including the sailors of the Cheonan,

will not end up in futility.

The bereaved families of the fallen sailors are saying, “You may forget our

sons, but never forget the lesson the Cheonan gave us.” A memorial service

will be held in honor of the fallen sailors at the Daejeon National Cemetery at

10 a.m. today. We are trying to ensure that the memorial service and

atmosphere will not be affected by the Nuclear Security Summit to open in

Seoul today.

The nation certainly has many important economic and political affairs to look

after. But what can be more sublime than remembering those who died while

fulfilling their duties to defend the country? I sincerely hope that the nation

will never forget the names of the 46 young men who perished along with the

Cheonan as well as Warrant Officer Han Joo-ho.

[Dong-a Ilbo, March 26, 2012]

www.koreafocus.or.kr

Civic Movement Put to Test

Cho Hyo-je Professor of Social Science Sungkonghoe University

Each party has nearly finished nominating its candidates for the National

Assembly in preparation for the April 11 general elections. One of the

important points to take note in the run-up to the elections is civil society

groups’ participation in politics. Individual dissidents and civic activists have

participated in politics in the past. In fact, the current leader of the main

opposition party used to be a civic activist herself. But civil society

organizations turning themselves into political groups, some playing a crucial

role in uniting progressive parties, are a totally new phenomenon.

The leader of a civic group won the Seoul mayoral election last year, butit

remains to be seen how the civil society’s mass participation in politics will

affect the parliamentary elections. To be sure, though not known widely, there

is lively debate going on inside the civic groups themselves about the possible

extent of their influence. There are, of course, pros and cons, and realists and

idealists, regarding the political participation of civil society.

Many people believe the state, the market, and the civic society are clearly

divided. But this generalization is nothing but a schematic categorization. In

fact, they overlap, conflict, or cooperate with each other. Many civil society

groups have been deeply involved in issues of real politics, demonstrating

significant influence. They have played a role in making up for democratic

deficiencies that have been incurred because party politics and journalism

failed to play their proper roles. And it cannot be ignored that some elite

members of the judicial circles, academia, the press, and the civic society have

traditionally been absorbed into the political arena. Metaphorically speaking,

as there are non-banking financial institutions besides banks in financial

circles, there are non-party organizations besides political parties in the

political arena.

This is a characteristic of Korean politics and civil society, a phenomenon hard

to imagine in neighboring Japan, not to mention in most Western countries.

Foreign researchers find it unfamiliar. The phenomenon is hard to explain with

normative theories imported from overseas. Critics of civic engagement in

politics include both progressives and conservatives. We need to look squarely

at the fact that most critics base their views on the principle that civil society

movements should be separated from politics. But the historical roots of

Korean civic movements cannot be denied simply because they do not

conform to widespread principles. Rather, it is desirable to admit the civil

society’s participation in politics as an objective reality and seek ways to

maintain the respective characteristics of political and civic societies.

To this end, we should make it a rule to evaluate politics and civic movements

under different standards of legitimacy. As is well known, politics functions on

the principle of official and legal representation. Politicians who are elected

through democratic procedures engage in activities and make decisions as

representatives with authority delegated by the people. Once elected, they

should coordinate matters of public interest and achieve social integration as

representatives of the entire electorate as well as their supporters.

But civic movements are different. They lack official representation endowed

through elections. Therefore, civic movements may be evaluated based on

their intrinsic value, transparency of activities and responsibility to supporters.

From this point of view, civic participation in politics itself poses no problem.

Problems occur only when different standards of legitimacy between the

political and civic societies are confused. It is natural that unlike politicians,

civic activists should focus on their personal values. In this regard, they should

speak and act with more solid ethical convictions than now.

But once they decide to enter politics, civic activists need to accept quite

different principles and ethical responsibilities of the public sector. While

keeping the values of civic movement, they must be prepared to seek

compromises sometimes and play Machiavellian roles at other times.

Basically, they should be ready to accept political evaluation while they

engage in politics. It is neither good nor bad for civic activists to engage in

politics. They just should bear in mind that different standards of legitimacy

are applied to different spheres of activity. Then, politics can be rejuvenated

and civic movements can find their proper place.

[Hankook Ilbo, March 14, 2012]

www.koreafocus.or.kr

- Preconditions for Korea-China FTA

- Structural Change in Income Distribution

- The Right Course of Chaebol Reform

- Water Stress in Korea

- The Economic Korean Wave in Japan

Preconditions for Korea-China FTA

Kim Hyun-chong Former Trade Minister

Korea finally appears to be ready to start negotiations for a free trade

agreement (FTA) with China. If signed, the trade pact would have considerable

effects on the bilateral political, military, diplomatic, social and cultural

relations between the neighboring nations under the broad concept of

economic security surrounding the Korean peninsula. Therefore, Korea will

need to carefully calculate the potential profits and losses in terms of

geopolitical security as well as actual economic impact before it begins to

negotiate.

Beijing tends to prioritize political factors in its FTA strategy. Thus, Chinese

officials are more enthusiastic than ever about signing an FTA with Seoul due

to the Korea-U.S. FTA. One of Beijing’s multidimensional strategies is to

draw Korea into the greater Chinese economic bloc by means of free trade and

in the long run prepare for the day when it shares a border with a unified

Korea. Consequently, more than reducing or eliminating tariffs on

commodities and agricultural and marine products will be at stake.

There are eight key issues that must be addressed in the negotiations.

Protection of investors is the foremost problem. A group of Korean investors

were not properly compensated years ago, when they were forced to withdraw

from hotel business near Mount Paektu under order from Chinese authorities.

Therefore, provisions on investor-state dispute settlement should be included

in the Korea-China FTA.

Second, Korea has to demand additional opening of China’s services market,

especially the financial service sector. The FTAs that China has concluded so

far only involve tariff elimination and reduction on industrial, agricultural and

fisheries products. China has refused to open its domestic services sector

beyond the concessions it offered upon joining the World Trade Organization.

Third, environmental and safety standards should be absolutely strengthened.

If nuclear reactors located along China’s western coastal regions are stricken

by an earthquake or man-made disasters, the Korean peninsula will certainly

suffer severe effects.

Fourth, we, as a nation pursuing reunification, should try to forge agreement

with China to build an industrial complex in Dandong near the western North

Korean border and allow tens of thousands of North Korean workers to

commute to the plants. By doing so, the North Korean people will be exposed

to capitalism and the North’s regime will be able to implement arms reduction.

Such developments would elevate the livelihood of North Koreans who face

chronic food shortages and thereby provide the momentum for practical

changes in the isolated communist state.

Fifth, we must demand that products manufactured by South Korean investors

in North Korea’s special districts, such as Hwanggumpyong, an islet in the

mouth of the Amnok (Yalu) River, the Rajin-Sonbong special economic zones,

be classified as “Made in South Korea.” At present, products from the

Kaesong (Gaeseong) Industrial Complex north of the DMZ are recognized as

South Korean-made in some of Seoul’s FTAs. Such an agreement will entice

investment in North Korea from foreign companies eyeing the vast Chinese

market and help create jobs for North Koreans. In addition, stronger protection

of intellectual property rights, cooperation in food safety control and

standardization of food safety procedures should be included in the Korea-

China FTA.

Negotiations with China won’t be easy. Leverage is important in all

negotiations. Depending on the progress in free trade negotiations with China,

the time may come for Korea to raise the issue of striking a similar pact with

Taiwan. If necessary, Seoul may have to persuade Beijing to upgrade their

two-way FTA to a multilateral regional trade agreement, or RTA, that would

include Hong Kong, Macau, Taiwan, Mongolia and the 10 ASEAN countries.

Authorities in Beijing should be persuaded that an RTA representing

continental powers is needed to counter the 10-member Trans-Pacific

Partnership, or TPP, which is led by the United States, Japan and other

maritime powers but excludes China.

We need to make a cool-headed assessment of what would benefit us the most

– membership in the continental powers’ RTA, or success or failure of the

maritime powers’ TPP. Simultaneously, we should push for an inter-Korean

FTA based on comprehensive economic cooperation with North Korea, which

depends on China for 83 percent of its international trade. But the two Koreas

would first need to settle matters stemming from the North’s 2010 attacks on

Yeonpyeong Island and the warship Cheonan.

We must be careful to maintain a balance between a rising China and a waning

United States. While striving to be impartial between the two powers, we must

establish our domestic, unification and diplomatic policies on the basis of

realism, rather than ideology. A superpower generally tends to demand more

from a weaker party than it gives. Time on the Korean peninsula is ticking in

favor of China, not the two Koreas. We must go to the FTA negotiating table

with China while bearing in mind this stark reality.

[JoongAng Ilbo, March 7, 2012]

www.koreafocus.or.kr

Structural Change in Income Distribution

Kim Yong-ha Professor of Economics Soonchunhyang University

The nation’s income distribution in 2011 deteriorated sequentially but was

better than 2009, according to Statistics Korea. Korea’s Gini coefficient, an

index that gauges income equality, was 0.311 in 2011, a tick worse than the

0.310 in 2010 but better than 0.314 in 2009. (Zero on the index means perfect

equality and 1 is maximum inequality.)

Quintiles, the ratio of the richest and poorest 20 percent of income earners,

have been on the rise since 2007, indicating that the gap in income distribution

has widened in the wake of the global financial crisis.

The problem lies in our economic and social structure. In our export-oriented

economy, added value is mostly created by export companies with

international competitive advantage. Across-the-board economic growth is

possible only if wealth from exports trickles down to enterprises that serve

domestic demand. But the link between the exporters and domestic suppliers is

very weak, exacerbating the industrial polarization.

Industrial polarization eventually leads to employment bipolarization, which

will increase regional divide. Under the current economic structure, income

distribution will certainly continue to worsen. Government taxation and social

safety nets can help shore up income distribution, but in Korea, disposal

income inequality is lower than market income inequality and the gap is

widening.

Taxes and social insurance charges against gross domestic product (GDP)

exceed 25 percent and the ratio of public social expenditures to GDP has

spiked to around 10 percent.

Despite the government’s persistent efforts, it remains difficult to close the

income gaps. One of the reasons is the nation’s aging population. As people

get older, their income declines sharply. The income inequality is magnified if

they did not save enough during their prime working years. Thus, the income

gap between the elderly and younger workers and among the elderly

themselves becomes more pronounced as the nation grows older.

The ongoing deterioration in our nation’s distribution structure is due mostly

to population aging. A case in point is Japan’s Gini coefficient of market

income, which is in excess of 0.50, far higher than Korea’s 0.34. The reason

for the gap is not because industrial and employment bipolarization is more

severe in Japan than in Korea, but because Japan has become the world’s most

aged country with the percentage of its elderly population, aged 65 or older,

exceeding 20 percent. In comparison, the percentage of elderly people in

Korea has just topped 10 percent.

The problem is Korea is similar to Japan in that both nations have low birth

rates and a rapidly aging society. It is no exaggeration to say that Korean

society in 20 years will closely resemble today’s Japan. Accordingly, our most

urgent priority in preventing a further worsening of distribution structure is to

arrest population aging. Of course, even if our nation’s birth rate was to

reverse now, the effects will not be tangible for 25 years. Nevertheless, the

government has to devise a long-term strategy to fundamentally solve the low

fertility problem. In this sense, state expenditures designed to tackle the low

birth rate can be seen as an investment in the future.

At the same time, macroeconomic policy efforts should be made to ensure that

export-produced added value trickles down to the domestic sector. A weak

won helps the nation’s export growth but raises import costs and subsequently

weighs on domestic consumption. Japan has striven to boost domestic

spending even at the expense of export competitiveness by holding fast to a

strong yen over the past several years. The sustained weakness in the value of

the won will hinder efforts to tame consumer prices, particularly amid the

recent surge in international oil prices. It is necessary to carefully readjust our

macroeconomic policy stance.

[Financial News, March 6, 2012]

www.koreafocus.or.kr

The Right Course of Chaebol Reform

Lee Sang-bin Professor of Business Administration Hanyang University

Election season debate over the reform of chaebol, or family-run large

conglomerates, has erupted again. Ahead of the April 11 general elections,

both the ruling and opposition parties have issued a flurry of pledges to reform

the chaebol. President Lee Myung-bak’s recent warning about bakery

businesses run by daughters and granddaughters of chaebol families was in

line with the campaign rhetoric. Revival of the equity investment ceiling

system, regulation of exclusive intra-group transactions and a ban on circular

equity investment also are under discussion.

However, these measures hardly inspire much hope. The cap on chaebol’s

cross-affiliate investments has already proven inefficient. Even if the

controversial equity ceiling system is complemented and revived, its

effectiveness will remain questionable. The government has already created

new taxes to deter chaebol from funneling subcontracting work and business

to their subsidiaries. Ending inter-chaebol transactions chaebol financial

services companies can also be problematic. If chaebol are forced to sell off

stocks due to a ban on circular equity investments, only private equity funds

like Lone Star Funds of the United States will reap financial gains. In this

context, reform ideas from rival political parties are expected to fizzle out after

this year’s elections.

In spite of persistent criticism from the general public, the chaebol companies

have made indisputable contributions to national economic development and

the livelihoods of people through job creation. However, people are seldom

cheered by record profits of export-orientated conglomerates. They complain

that the chaebol wield disproportionate influence over the economy; they

believe the record profits merely benefit the chaebol themselves rather than the

overall national economy.

According to the trickle-down theory, the prosperity of chaebol is supposed to

eventually benefit all people. The trickle-down effect can be expected when

water overflowing from the so-called “self-emptying cup,” which figuratively

refers to chaebol, gets the floor wet. Similarly, in the traditional ondol (warm

stone) floor heating system, heat is supposed to spread from a warm area to a

cool area. But the system will fail if the heat does not spread.

Chaebol enterprises can achieve trickle-down effects through salaries,

payments to subcontractors, and investments. But these days they increasingly

depend on contract workers, who are paid lower salaries, rather than hire on a

full-time basis. The manufacturing sector’s employment inducement

coefficient also remains low, meaning that chaebol’s additional job creation

effects are insignificant. In addition, large conglomerates are absorbed in

fattening their profit margins by gouging subcontractors and suppliers and

stealing their technologies and business achievements.

Chaebol also seek easy business opportunities in neighborhoods, instead of

carrying out risk-taking investments. On top of that, the government has kept

the value of the won artificially low under its exports-at-all-cost policy,

creating inflationary pressure in the national economy. The government is now

pushing to lower the corporate tax rate under its business-friendly slogan.

Against such a backdrop, chaebol’s huge dividends seem to trickle down to

foreign investors who own approximately half of many chaebol companies’

shares.

The Japanese author of the book titled “Rich Samsung Poor Korea” asks

which is more beneficial to people, a nation where a few enterprises enjoy

record-breaking profits in an oligopolistic market, or one where all companies

can compete fiercely even though their combined profits barely reach that of a

single oligopolistic conglomerate in the neighboring country. The answer is the

former nation, if record-breaking corporate profits trickle down to ordinary

people. Otherwise, the answer is the latter. Consumers benefit from

competition between enterprises, which is not the case of the former nation.

The chaebol reform should now focus on maximizing the trickle-down effects.

We should consider abolishing the conversion of non-regular workers to

regular workers, though the controversial policy was introduced to help

enhance labor market flexibility. The proposed hike in the top corporate tax

rate and unfair subcontracting transactions should also be scrapped. All these

measures should be denounced as anti-market. In an oligopolistic market,

however, we cannot single-heartedly stick to market-friendly policies. It is not

appropriate to insist that protection of shareholders is market-friendly and

protection of stakeholders is anti-market.

Former General Motors President Charles Erwin Wilson, who served as the

secretary of defense under President Dwight Eisenhower from 1953 to 1957,

left a famous saying at the Senate confirmation hearing of his appointment:

“What is good for the United States is good for General Motors and what is

good for General Motors is good for the country.” But even the mighty

General Motors couldn’t help treading the path to decline after falling out of

favor with the American people.

The Dalai Lama once said, “Whether we like it or not, we’re all connected,

and it is unthinkable to be happy all by oneself.” Chaebol, which appear to be

intoxicated by their accomplishments regardless of public sentiment, are

advised to keep this wise saying in mind.

[Maeil Business Newspaper, February 29, 2012]

www.koreafocus.or.kr

Water Stress in Korea

Park Seok-soon

President

National Institute of Environmental Research

Today we celebrate the 20th annual World Water Day. This day was formally

proposed at the United Nations Conference on Environment and Development

in Rio de Janeiro, Brazil, in June 1992 to increase awareness about the

importance of water in the environment, agriculture, health and trade. The next

year, the U.N. General Assembly proclaimed March 22 as World Day for

Water.

As the United Nations raised the issue of water scarcity, the U.S.-based

Population Action International (PAI) named 18 water-scarce countries and

nine water-stressed countries, with the rest of the countries defined as water-

rich, in 1993. Korea was included among the water-stressed countries, a

designation that disputed. The debate further intensified when the government

embarked on a project to refurbish and clean up the nation’s four major rivers

– Han, Nakdong, Yeongsan and Geum.

Some environmental activists and groups supported by professors and other

intellectuals argue that Korea’s designation as a water-stressed country is

deception used by the government to push for the four river refurbishment and

dam constructions. They contend that PAI is a private research institute with

no relation to the United Nations, claiming that Koreans are not experiencing

any water-related inconvenience. The government and water experts retaliate

that the PAI list was compiled in consideration of each country’s water

circumstances and relevant data and standards, and has been used by the

United Nations as well. People seem too confused to trust either side.

Recently, an international organization has released more reliable data that can

end the debate. In its report titled “Environmental Outlook to 2050,” released

on March 7, the Organization for Economic Cooperation and Development

(OECD) said that Korea was experiencing severe water stress. The OECD also

introduced Korea’s four river restoration project as an exemplary case for

water resource management and green growth. The OECD report contended

that the four river project is expected to create US$32.8 billion (37 trillion

won) in economic benefits and 340,000 new jobs. It also forecast that Korea

will emerge as a global leader in water resource management based on its

experience in the four river project and related technology development.

Nevertheless, opponents of the four river project appear determined to ignore the OECD report, reiterating that the Korean people are not experiencing water stress. Their argument may sound plausible but it ignores the issue of our nation’s food and virtual water imports. About 40 percent of Korea’s food demand is met through imports and the shipments contain a huge amount of virtual water. Virtual water refers to the water used to produce food and

industrial products. For instance, it takes 1,900 to 5,000 liters of water on average to produce one kilogram of rice, 1,100 to 2,000 liters of water to produce one kilogram of beans, and 15,000 to 70,000 liters of water to produce one kilogram of beef. As of 2007, Korea’s food imports contained 45 billion cubic meters of virtual water, including 31.6 billion cubic meters in grains and 8.9 billion cubic meters in livestock products. That is more than three times the nation’s water storage capacity of 13 billion cubic meters, which is held in dams and agricultural reservoirs. Of course, our exports of consumer and industrial products also contain virtual water. Considering all factors, the nation ranks as the world’s fifth largest virtual water importer, with its total imports exceeding 32 billion cubic meters. But virtual water imports are expected to become difficult in the near future. That’s because world food production declines every year due to climate change with the demand of grain for bio-energy production rising sharply. Every one-degree Celsius rise in average global temperature can reduce the world’s grain yields by 10 percent. By around 2025, world grain production will be 30 percent less than the current level, according to food experts. On the contrary, due to the rapid population growth, the global demand for food is expected to increase 50 percent by 2030 and double by 2050. Historically, Korea has been affected by droughts and floods. By origin, the nation is a water-stressed country. But we now need huge amounts of water, due to irrigation farming, advanced industrialization and high population density, among other factors. Korea has so far managed to overcome its severe water shortages. Let’s terminate the debate on water scarcity now, as its conclusion is crystal clear. Let’s pool our wisdom and prepare for climate change and energy crisis.

[Korea Economic Daily, March 22, 2012] www.koreafocus.or.kr

The Economic Korean Wave in Japan

Bae Geuk-in Tokyo Correspondent The Dong-a Ilbo

These days, Koreans living in Japan say they find it increasingly convenient to

communicate with Japanese people, thanks to the spread of hallyu, or the

Korean Wave.

A Korean housewife, who moved to Japan last year, is one of the beneficiaries,

as she now feels completely relaxed among Japanese friends. At first, she was

embarrassed about not being to speak Japanese. After several months,

however, her tension was gone and her lack of Japanese language skills posed

few problems. When she met with mothers of her daughter’s kindergarten

classmates, one talked to her in English and another in Korean. As time

passed, she became friends with all of the mothers and she is now busy

responding to invitations to visit their houses.

She has no problem communicating in a mix of English and Korean, though

her English is not fluent. Indeed, the Korean Wave has sparked a fad for the

Korean language in Japan. Japanese housewives are particularly enthusiastic

about learning Korean, carrying around notebooks and pens. Amid the Korean

fever, Korean residents “complain happily” that their knowledge of Japanese is

of little use these days. Many of them say they even feel flattered.

Ethnic Korean residents used Japanese-style names in the past but many of

them now proudly display their Korean names. Unlike in the past, a growing

number of Koreans are found proudly speaking Korean in subways and other

public places. The surging national pride among Koreans cannot be explained

simply by the cultural aspect of hallyu, which encompasses television dramas

and pop songs. It is the so-called “hallyu economy” that has decisively

changed the mainstream Japanese society’s perception of Korea. Hallyu

economy and hallyu culture constitute the two pillars of the Korean Wave that

help boost the Korean people’s self-esteem abroad.

In one vivid example, Japanese newspapers, magazines and televisions are

competitively running special features on Korean economy. In a recent

Saturday morning program, one Japanese TV network commented: “In the

entertainment field, (Japan) has been overpowered by hallyu. In the television

market, chief executive officers of Sony and Panasonic have been replaced

after the Japanese electronics giants fell behind Samsung and LG in the global

markets. In February, Elpida Memory, the last Japanese maker of computer

memory chips, filed for the nation’s biggest bankruptcy in two years. This is

only part of the whole story. Korea’s free trade deals with the European Union

and the United States have taken effect and tariffs on most industrial products

and cars will be eliminated in Korea’s trade with these vast markets within five

years. At the current pace, (Japan) will be overtaken by (Korea) in all areas.”

One senior Japanese journalist recently said: “Since the Meiji Era, Korea has

never been such a threatening competitor to Japan. A much fiercer competition

is expected for this year.” Japan has always kept a watchful eye on Korea but

has been reluctant to recognize its neighbor as a rival. But fundamental

changes in the Japanese mainstream perception of Korea appear to be under

way.

Not surprisingly, a number of the Korean economy-related books have been

published. Their titles include “Why do Korean companies win in the global

markets?” and “Let’s learn about the strong Korean economy.” Various

academic forums on Korea’s economy also have been held in Japan. Keio

University economist Heizo Takenaka, who served as minister of internal

affairs and communication and minister of state for privatization of postal

services in the cabinet of Prime Minister Junichiro Koizumi, has repeatedly

said in recent years that “the time has come to study the hallyu system.” He

apparently meant that Japan has to learn the secrets of Korea’s success.

The most sought-after lesson Japan obviously wants to learn from Korea is its

entry strategy for global markets. From the beginning, Korea looked to foreign

markets to overcome the small size of its domestic market. Japan, which has a

land mass nearly four times larger than Korea and its population about 2.5

times, focused more on its domestic market. As soon as the Korea-U.S. free

trade agreement went into force on March 15, Japan’s Yomiuri Shimbun

lamented that “Japanese enterprises would now have to fight their Korean

rivals with a handicap.” The Asahi Shimbun is reporting extensively on

Japanese industrial plants that have lost to Korean rivals and shut down as well

as lost jobs and bankrupt regional economies.

Japan’s manufacturing technology, once the country’s pride, is now dismissed

as “domestically oriented.” Ironically, some of Korea’s success formulas that

Japan is now trying to learn are likely to be scrapped by Korean politicians,

who are rushing to embrace populist welfare policies ahead of April’s general

elections. Is this also a part of the hallyu system? The impudent attitudes of

our politicians cannot be overlooked as insignificant, particularly in light of

our turbulent history.

[March 26, 2012]

www.koreafocus.or.kr

- Reasons to Record and Remember North Korea’s Tragic Human Rights Situation

- How to Make the ‘Korean Legend’ Continue

- Heroes Who Built the Ieodo Ocean Research Station

- Truth about Gureombi Rock

Reasons to Record and Remember North Korea’s Tragic Human Rights Situation

Kim Tae-hoon Lawyer & Chairman Special Committee on North Korean Human Rights National Human Rights Commission of Korea

The North Korean Human Rights Documentation Center and Archives

operated by the National Human Rights Commission of Korea marked its first

anniversary on March 15. Before the center’s opening, there had been

scattered testimonies and record keeping on North Korean human rights

violations. The center became the first state-run institution to compile

individual cases amounting to criminal offenses and to document them for

comprehensive and systematic management and preservation.

More than 23,000 North Koreans have defected to South Korea so far. These

defections, braving China’s adamant policy of forcible repatriation, clearly

indicate that there are human rights problems that are more serious than food

shortages in the North Korean system. Under these circumstances, the

National Human Rights Commission set up the North Korean Human Rights

Documentation Center and Archives to provide the legal foundation to seek

punishment of violators of universal international human rights norms, thereby

establishing the basic order of free democracy after reunification.

Furthermore, the archival data will be utilized as reference sources for

recruiting North Korean personnel after unification, as well as evidential

matter for reinstatement, retrial or damage compensation for victims and basic

material for human rights education.

As early as November 1961, West Germany established the Central Registry of

State Judicial Administrations in Salzgitter to verify human rights violations

committed by the government of East Germany before reunification, which

turned out to be quite successful. In Korea, the National Human Rights

Commission, an independent and quasi-international organization, has

assumed the comparable role to provide international agencies such as the

United Nations with reliable data, taking significant and efficient steps toward

improving the human rights situation in North Korea.

As of February 28, a total of 81 cases of human rights violations in North

Korea, involving 834 individuals, have been reported to the center. All of these

cases are serious enough to deeply shock human consciousness and would

prompt a nationwide demand for new leadership if they happened in South

Korea. Especially, human rights abuses in North Korean prisons, called

kyohwaso, meaning “re-education center,” which have drawn less attention

than concentration camps for political prisoners, have been found to be

extremely serious.

According to the testimony of a North Korean defector, who was confined at

Re-education Center No. 12, also known as Chongori Re-education Center, from the second half of 2007 to early 2010, some 3,000 inmates at the center had been forcibly deported back from China and more than 70 people died from malnutrition every month. Another defector, who was detained at Re-education Center No. 11, or Chungsan Kyohwaso, around June in 2005, said that he had carried the body of a dead prisoner on an oxcart and buried it on a bare mountain called “Flower Garden.” The corpse was numbered 3721, so the defector believed he was the 3,721st inmate to die at the prison that year. The National Human Rights Commission finds out about brutal infringements of the basic human rights of North Korean residents and keep records on cases violating the four major international human rights treaties, to which North Korea is a signatory, particularly the “Rome Statute of the International Criminal Court,” which defines crimes against humanity according to international standards. North Korea’s ruling class looks to be firmly united from the outside, but in fact they must feel very uneasy about the fate of the Kim Jong-un regime. As they fret about regime collapse, the message that the world is watching their evil deeds and documenting them would have tremendous repercussions. The impact would be even stronger than what East Germany felt about the activity of the West German registry on its human rights violations. If the North Korean Human Rights Documentation Center and Archives produces “letters of indictment” against North Korea’s new leader, who ordered the execution of any defector during the mourning period for Kim Jong-il, and officers in charge of carrying out his orders to systematically abuse the fundamental rights of their population, the center will effectively compile historical records on brutal crimes committed by the communist regime. Thus its very existence will help reduce human rights violations in the North and send hope and comfort to victims.

[Munhwa Ilbo, March 22, 2012] www.koreafocus.or.kr

How to Make the ‘Korean Legend’ Continue

Lee Shin-hwa Professor of Political Science and International Relations Korea University

While studying in the United States many years ago, I had a chance to work at

the World Bank for a while. I was a political science major, but the opportunity

to work for the global financial institution mostly staffed by economics majors

arose because a security-related project was under way. I also believe that I

owed the opportunity to my predecessor, a female researcher of Korean

descent, who had earned a good reputation for her job performance.

Now that Jim Yong Kim, the Korean-born president of Dartmouth College in

the United States, has been nominated as the next president of the World Bank,

two of the world’s “Big Three” international organizations (United Nations,

World Bank and IMF) could be led by ethnic Koreans. Some people say that

the nomination came from President Barrack Obama’s political consideration

to placate the resistance of newly developing countries to another U.S.

nominee leading the World Bank. However, political consideration cannot be a

major reason for nominating the head of an organization that exerts great

influence on the global village’s politics and economy.

Some years ago, the late Dr. Lee Jong-wook, director-general of the World

Health Organization, actively worked as the first Korean chief of a U.N.-

affiliated agency, earning praise as the world body’s “Little Giant.” U.N.

Secretary-General Ban Ki-moon has also displayed enough leadership to be

reelected to a second term. Apart from Kim’s outstanding personal

qualifications and ability, one may say that the impressive activities by these

Koreans in the international community influenced President Obama’s

decision.

Along with these individuals’ capabilities, the Korean government has also

exerted remarkable efforts since South Korea joined the United Nations in

1991. The number of Koreans serving at international organizations has

continued to increase. As of June 2011, a total of 398 Koreans are working for

international organizations, nearly triple the 139 in 1999. During the same

period, the number of Koreans serving in high-ranking positions at

international bodies has also risen from 10 to 37.

However, Koreans still claim an insignificant portion of staffers at

international organizations. Currently, Korea accounts for 2.26 percent of the

U.N.’s regular budget, ranking 11th in terms of the amount of contribution

among the world body’s 193 member nations, but Koreans constitute a mere

0.26 percent of the entire staff of the U.N. Secretariat. Korea remains one of

the under-represented countries in the United Nations, with its citizens

constituting no more than 1 percent of the workforce at any U.N. agency. This

is why our nation has to apply more systematic and aggressive diplomatic

efforts toward the world body.

However, we must not think that raising the portion of Korean staffers at international organizations will directly serve Korea’s national interests. Working as a staff member of an international organization means being a public servant of the entire international community. Therefore, our government has to devise its policy toward international organizations from long-term perspectives rather than focusing on the immediate practical issues such as increasing the number of Korean staffers and hosting international events or organizations. In other words, the nation should try to expand the scope of its multilateral diplomacy by demonstrating its leadership as a middle power through the exploitation of niche issues of global importance or contributing to operational reforms at international organizations. These efforts will eventually lead to greater advances in Korea’s status and prestige. Despite being a major economy with membership of the OECD and G20 and boasting of the world’s top-notch technology as an information and communication powerhouse, Korea is still groping for its position and role as a middle power in global politics. It is especially difficult to promote our national interest and prestige by building up hard power such as military strength amid the current international circumstances dominated by complexity and uncertainty with the United States and China locked in competition. On the other hand, it is a more realistic alternative to improve our status and influence by strengthening soft power, which is represented by international reputation, cultural charm and national image. When there are more Koreans internationally recognized and respected and the Korean government’s diplomacy and policy efforts equipped with global vision and strategies create synergy effects, the “Korean legend” will go on.

[Chosun Ilbo, April 3, 2012] www.koreafocus.or.kr

Heroes Who Built the Ieodo Ocean Research Station

Bang Hyeong-nam Editorial Writer The Dong-a Ilbo

Kim Si-jung, former minister of science and technology, feels like being on

cloud nine these days in spite of having a sore throat. China’s recent territorial

claim to Ieodo, a submerged rock south of Jeju Island, ironically reflects the

importance of the ocean research station built on the rock, for which he laid

the groundwork while in office. He even feels proud that he made a successful

example in preserving national interests by foreseeing future problems amid a

rapidly changing international political environment.

When Kim visited the Korea Ocean Research and Development Institute

(KORDI) in February 1993, shortly after taking office under the newly

installed administration of President Kim Young-sam, he was briefed on a

project to build an ocean research facility on Ieodo. The project was the

brainchild of Dr. Lee Dong-yeong, then a principal researcher at the institute.

He had been insisting on building the facility since 1991. After ordering a

delay, Kim began studying the project.

First, Kim heard opinions from various government offices. All the eight

relevant ministries including the Ministry of National Defense agreed to the

project. Encouraged by the results, Kim explained the purpose of the proposed

construction to Chung Jae-seok, deputy prime minister and concurrently

minister of economic planning board, in early 1994 and succeeded in getting

his commitment to allocate the necessary budget.

The KORDI’s initial plan had been simple. Its idea was to plant steel pipes on

the underwater rock and build an unmanned observatory. But Kim had a

different idea. To him it seemed unreasonable to build such a small and shabby

structure, if it was to serve various purposes, including weather and ocean

observation, securing marine resources and clarifying territorial boundaries.

What was needed, he thought, was an inhabitable facility equipped with a

heliport for convenient travel.

History is made by intricate encounters. Kim’s meeting with Dr. Lee was

crucial to the development of a scholarly idea into a national project that

would protect the legendary island and the surrounding waters from territorial

ambitions of neighboring countries. Another man played a vital role in the

landmark construction: Dr. Sim Jae-cheol, a public works specialist who

headed KORDI’s Climate Change and Coastal Disaster Research Department,

who had participated in the project from the beginning.

The design of the proposed station was completed in 1994. Kim sounded out

the responses of other countries and international organizations, including the

United Nations, with the assistance of Dr. Park Choon-ho, an authority on

international maritime law. Most of the respondents expressed favorable

opinions, saying there would be no problem in building an observation facility

at a spot closer to Korea than any other country. The embassies of China and

Japan in Seoul also were notified and neither objected.

Still, many residents of Jeju Island fiercely opposed the plan. They denounced

it, asking how anybody dared to drive steel posts into the rock which had been

regarded as a Utopian island enriching the mythical imagination of the

islanders for such a long time. The KORDI succeeded in persuading the Jeju

residents by assuring them the construction work would be kept unrevealed to

outsiders as much as possible. While overseeing the construction from 1998,

Sim made more than 10 visits to Jeju to talk to local folklorists and professors.

Despite delays due to difficulty in finding a contractor, the Ieodo base finally

soared to 36 meters above sea level in May 2003. Korea became the owner of

an ocean observation station thanks to the heroes who tenaciously carried out

the project, looking ahead to the future of the nation. “If we tried to build the

station today when China’s national power has rapidly expanded, the

construction would have been impossible,” Kim said.

Ahead of the general election, political parties are churning out myriads of

promises. One wonders how many can compare to the Ieodo station project in

terms of importance to the nation. Likewise, is there any cabinet minister

today who is working so eagerly to realize a future-oriented policy as Kim

did? Did anyone among the opponents to the Korea-U.S. FTA calculate in

earnest the future value of the free trade deal? Have those opponents to the

Jeju naval base construction ever imagined the security interests to be gained

by Korea after the base is completed?

I want to suggest that politicians who are running to become lawmakers take

the time to study at the least the history of the Ieodo station construction. Do

we have to watch the 19th National Assembly open with yet another bunch of

short-sighted politicians who are either incapable of or uninterested in looking

ahead even a few years while pursuing their immediate personal interests?

[March 18, 2012]

www.koreafocus.or.kr

Truth about Gureombi Rock

Hong Chan-sik Chief Editorial Writer The Dong-a Ilbo

Amid the prolonged disputes over the construction of a naval base on Jeju

Island, we often hear the unfamiliar word “gureombi.” On her visit to the

controversial construction site on March 7, Han Myeong-sook, chairwoman of

the main opposition Democratic United Party, called for the government to

“stop the blasting of Gureombi.” Some popular entertainers such as

broadcaster Kim Mi-hwa and singer Lee Hyo-ri have joined the campaign,

twitting that “Gureombi should be protected.”

“Gureombi” is a Jeju native dialect referring to the tree with the academic

name Litsea japonica. There is an abundant amount of this evergreen on Jeju

and the southern coastal districts of Korea. Then it should seem certain that so

many people, including Chairwoman Han Myeong-sook, have not stood up to

safeguard the commonplace tree. What they are trying to protect appears to be

a rock outcrop on the shore at the construction site. It is called “Gureombi

Rock” because of its location near a colony of gureombi tree.

Those who oppose the Jeju naval base construction have tenaciously adhered

to their assertion that cultural relics and animals and plants at the construction

site should be protected. All construction projects on an area over 30,000

square meters are required by the law to undergo a surface investigation to

determine whether the site has underground cultural artifacts. Construction can

be canceled if the site is judged to have buried cultural relics or it is feared to

damage natural monuments. Indeed, back in the 1990s, the Korea Racing

Authority scrapped its plan to build a racecourse in the Bomun Lake Tourist

Complex in Gyeongju, as historical sites and relics continued to be unearthed

in the process of surface investigation.

If the site for the naval base on Jeju contains truly valuable artifacts, or rare

animals and plants, supporters of the construction project may change their

minds. Cultural and environmental issues are that sensitive. When the Jeju

naval base construction plan was finalized in 2007, the opponents first raised

the issue of preserving a colony of soft corals near Bam Island, some 1.7

kilometers away from a breakwater for the base. Designated Natural

Monument No. 442, the soft corals are a species with tender skeletons.

The Cultural Heritage Administration asked the Seoul National University’s

Research Institute of Oceanography to investigate the possibility of pollutants

from the proposed construction site harming the soft corals. The investigation

found that ocean currents flow from the soft coral colony toward the

construction site. It meant that even if pollutants were released from the site,

they would not reach the soft corals.

Next, the opponents made an issue of Asian shore crabs and narrow-mouthed

toads which inhabit in front of the construction site. Eventually, an agreement

was made to capture all the Asian shore crabs and narrow-mouthed toads and

relocate them to a nearby location that has a similar environment. That cost

about 150 million won.

Folk religion was also on the list of problems raised by the opponents. They

demanded that an old place for offering prayers on the construction site be

preserved and named a state-designated cultural property. In response to their

request, members of the Cultural Heritage Committee, an advisory body for

the Cultural Heritage Administration, examined the place and reached the

conclusion that it fell short of qualifying for designation as such in terms of

historical and academic value.

Investigations were conducted over the entire construction site of 280,000

square meters to determine whether any section had cultural artifacts buried

underground to be preserved. Some archaeological remains dating to the early

Iron Age were discovered in parts of the site, but the total area considered

worthy of cultural preservation only amounted to 2,400 square meters.

Gureombi Rock is the latest card of the opposing forces in their desperate

effort to deliver a decisive, critical blow to halt the base construction. They are

demanding that the rock be designated a natural monument, which would

surely be a powerful tool to obstruct the construction. However, the Cultural

Heritage Committee has already concluded that the rock has little

topographical distinction compared to many locales along the island’s

coastline.

Some netizens criticize the Cultural Heritage Committee as well as the

Cultural Heritage Administration for its decision, but the committee is the

highest decision-making authority. It consists of private experts who work

independently. The committee is dedicated to the maximum possible

protection of cultural heritage, so denouncing the committee lacks persuasion.

The opponents have continuously attempted to halt the construction by raising

one issue after another. It now looks evident that they are not trying to protect

culture and the environment but are using them as political tools to condemn

and obstruct the naval base construction.

When the blasting of Gureombi Rock began, Kim Jin-pyo, floor leader of the

Democratic United Party, called for its suspension, insisting that the rock is

located within a UNESCO biosphere reserve. But his assertion turned out to be

ungrounded. Some netizens asserted that the rock belongs to a UNESCO

World Natural Heritage site, which also proved untrue. Korean leftist forces

have thus revealed their time-worn tactics of exaggeration, distortion and

fabrication to achieve their goals.

Even those who are leading the anti-base campaign seem to be confusing the

gureombi tree and the rock. Therefore, most ordinary citizens lack in-depth

understanding of the environmental and cultural issues surrounding the naval

base construction. Hence they are vulnerable to agitation. No matter how

important our natural environment is, the value of Gureombi Rock cannot

outshine the nation’s security benefits to be gained from the naval base. The

majority of people should make cool-headed judgment based on objective

facts.

[March 14, 2012]

www.koreafocus.or.kr

- Harmony of Peace from Paris

- K-pop into the China Market

- Historian Lee Ki-baek and Publisher Kim Seong-jae

- Bread over Books, Shoes over Books?

- Making Friends in Seoul

Harmony of Peace from Paris

Gabrielle Y. Guyonne Pianist & Music Director of Paris Appassionata Association; Professor at Conservatoire François-Joseph Gossec de Gagny

In the evening of March 14, the lobby of the Salle Pleyel Concert Hall in Paris

bustled with an audience awaiting an historic performance ― a joint concert

by North Korea’s Unhasu Orchestra and the Radio France Philharmonic led by

renowned South Korean conductor Chung Myung-whun. A long line formed in

front of the box office an hour before the concert started and the event’s

organizers said that all the tickets for the 1,900-seat hall sold out quickly. The

performance prompted enthusiastic applause from the full house.

The concert also drew full media attention. Radio France, arts broadcaster Arte

and reporters from local broadcasting stations and magazines were present,

while the press from South and North Korea eagerly captured images in and

around the concert hall. Just before the concert started, French Culture

Minister Frédéric Mitterrand appeared on the stage to remark, “I want to

celebrate that this hall represents unity through music.” He was obviously

moved by the assembly of musicians from the divided Korean peninsula,

which remains the Cold War’s last frontier.

The Unhasu Orchestra, made up mostly of players in their 20s, performed in

the first part of the concert. With most of its 70 members educated abroad, the

orchestra demonstrated impeccable ensemble and techniques in energetic

rendition of clean notes and rhythms. The opening song, “Young Circus Girls,”

based on traditional folk rhythm, aptly encouraged the festive mood with wind

and percussion instruments creating gorgeous harmony.

The second piece, “Two Traditional Instruments and the Orchestra,” featured

traditional Korean string instruments gayageum and haegeum played by

musicians dressed in hanbok costumes. Lyrical melodies of a lively and

innocent atmosphere, combined with excellent techniques of the musicians,

elicited exclamations from the audience. The performance proved that Korean

musical spirit can be delivered through Western classical music. There was no

awkwardness often found in immature ensemble of Western and traditional

Korean music. It was the kind of music that can be created by Koreans alone

but adroitly balanced with Western classical music.

Closing the first part of the concert was North Korean violinist Mun Kyong-jin

performing Saint-Saens’ “Introduction and Rondo Capriccioso in A Minor for

Violin and Orchestra.” It was followed by a piece for violin solo based on the

popular Korean folk song, “Arirang,” inviting nostalgic responses from many

Koreans in the audience. During the intermission, local audience members

were heard pouring out praises for North Korean music, which they felt was

“very emotional and dramatic.”

The second part of the concert was vibrant with majestic grandeur. Maestro

Chung led the Radio France Philharmonic playing Brahms’ “Symphony No. 1”

along with the Unhasu Orchestra. Amid its characteristic solemn mood, deep

resonance and tense crescendo, the symphony unfolded serene yet gloomy and

pathetic melodies. The slow and lyrical dance rhythm seemed to comfort the

closed and wounded hearts of Koreans from both sides of the border.

While the two Koreas have yet to overcome tension and conflicts arising from

their unhappy past, the concert delivered a significant humanitarian message of

hope for the Korean nation along its long journey into the future. The audience

held its breath as the two orchestras crafted sublime harmony of peace,

greeting the end of each movement with passionate applause in an unusual

rapport.

In response to the fourth curtain call following the Brahms symphony, Chung

took the microphone and remarked, “Politically, South and North Korea are

two countries, but we are one from the humanistic point of view.” Then, for

encore performance, he led the two orchestras in an orchestral adaptation of

“Arirang,” which he explained was “a song that every Korean knows,” and

Bizet’s “Carmen Overture.” Music has the power to move people beyond all

ideological barriers. We witnessed such a historical moment today.

[The Hankyoreh, March 17, 2012]

www.koreafocus.or.kr

K-pop into the China Market

Kim Seong-han Staff Reporter The Weekly Hankook

K-pop is waking up the dormant Chinese market. SM Entertainment is

launching a new music group, EXO, in South Korea and China

simultaneously; JYP Entertainment is promoting the popular Korean girl group

Miss A on the Chinese mainland; and other Korean entertainment companies

are also keen to make inroads into China. Given that China was seen as a

hopeless market by Korean musicians for many years, the situation is changing

dramatically. The following are key developments concerning K-pop’s foray

into the Chinese music market.

# China Emerges as a New Frontier for K-pop

It is now common for Korean entertainment agencies to incorporate Chinese

members into a group from the start to appeal to China’s music market. This

strategy was tested when SM’s Super Junior-M subgroup included a Chinese

member and entered the Chinese market. Similarly, JYP added two Chinese to

Miss A in an apparent bid to appeal more to Chinese audiences.

EXO is taking the approach to the next level by dividing its 12 members into

two teams, EXO-K and EXO-M for Korea and China, respectively. EXO-K is

scheduled to debut in Korea on March 31 and its Chinese alter ego will debut

the next night in China. EXO carries a special meaning for SM Entertainment,

which has constantly explored the Chinese market since 1998 when it secured

the Chinese government’s approval for the release of H.O.T.’s album

“Happiness.” It was the first-ever Korean music album to formally reach the

Chinese market.

# Chinese Market is Changing

SM and JYP are not the only Korean entertainment companies that are intent

on exploiting the Chinese market. Other Korean entertainment agencies are

trying to emulate the two frontrunners. Why do Korean agencies look to

China, a market notorious for copyright infringements? The main reason lies

in the changing market atmosphere in China. In 2006, the Chinese government

revised the concerned law to require foreign music content to obtain approval

from the Culture Ministry. This demonstrated the desire to protect the

copyright of foreign music in the domestic market.

In January last year, the Chinese government conducted an investigation into illegal music files transferred online and punished those who violated the copyright regulations. Google launched a commercial online music search and download service in 2008, and is pushing for the introduction of Green Dam, a content-control software to prevent piracy. China is yet to set up a transparent music file distribution and payment system, but what’s certain is that

transformative changes are under way in that country.

# Risk or Opportunity? Despite various negative factors, China is too important to ignore in terms of its growth potential for Korean entertainment firms and artists. According to the statistical data, China’s 2011 online music market was estimated at 2.24 billion yuan (370.3 billion won). Illegal piracy is declining fast while the legitimate online market is expanding rapidly. As of 2011, China has 360 million Internet users and 634 million mobile users, up 27 percent and 47 percent, respectively, from 2010. Korea’s entertainment industry is most optimized for the fast-expanding Chinese market. After all, Korean agencies and musicians have fought a series of tough battles at home against illegal piracy that is armed with eye-popping information technology. China’s attractive potential, however, comes with a price: more risks. The Chinese government is trying to nurture its local market, favoring Chinese singers over foreign competitors. In January this year, for example, the Chinese authorities placed a weekly, two-hour limit on entertainment broadcasts. Thus, as competition among Chinese entertainers intensifies, the chance for foreign counterparts is diminishing sharply. No wonder, then, that Super Junior-M, Miss A and EXO rely on Chinese members to appeal to the local audiences. “There will be more Korean music groups with Chinese members targeting the local market,” said an expert in the Chinese music market. “The experiment in China will be a new guide for fresh attempts at other markets,” he said.

[No. 2418, April 2, 2012] www.koreafocus.or.kr

Historian Lee Ki-baik and Publisher Kim Seong-jae

Lee Seon-min Opinion Desk Editor The Chosun Ilbo

The first issue of “Korean History Lecture for Citizens” published by Ilchokak

appeared in August 1987. The semiannual academic periodical never missed

publication for 25 years until it recently stopped at the 50th issue, completing

its mission in sharing academic research with ordinary citizens. Having made a

name for itself as a popular history magazine, it once sold over 10,000 copies.

Although sales numbers tapered, it was widely recognized for its broad and

balanced views, academic rigor and tone in appealing to a mass audience.

A large number of magazines come and go in the volatile publishing industry

in Korea. The non-commercial “lecture” series survived thanks to the firm

determination and passion of the late Sogang University professor Lee Ki-baik

(1924-2004), who masterminded the hard-fought endeavor. Professor Lee

belonged to the first generation of historians educated after the nation was

liberated from Japanese rule. He believed that sharing research results with the

public was just as important as conducting research itself.

During the 1960s and 70s, Professor Lee wrote excellent essays to correct

Koreans’ perception of history, which became distorted during the Japanese

colonial rule. The history lecture series was launched as nation-centered and

people-centered historical views clashed in the 1980s. Lee planned and edited

each issue and paid writers and printers with his own money. In his later years

when suffering from liver cancer, rather than rest, he expended his last bit of

energy on his final editorial meeting.

Lee had seen to the publication of the 35th issue. After his death, the younger

professors who had helped him as editorial writers, such as Yoo Yeong-ik of

Yonsei University, Min Hyeon-gu of Korea University, Lee Gi-dong of

Dongguk University and Lee Tae-jin of Seoul National University, continued

publishing the series for the next seven and half years.

Kim Seong-jae (1927-2005), the founder of Iljisa, is another unforgettable

figure who is remembered for familiarizing the public with Korean studies.

His company published a quarterly academic journal titled “Korean Studies

Bulletin” for 30 years. Kim entered the publishing industry while he was still a

student at the Seoul National University’s College of Education. In 1956, he

founded Iljisa, a publishing house that only produced humanities books, and in

the winter of 1975 he published the first issue of Korean Studies Bulletin with

the aim of eradicating the “colonized” historical views of Koreans.

Professor Kim Won-yong of Seoul National University tried to dissuade him,

saying that it was no good wasting his time on something that could not last

more than two or three issues at most. However, Kim persisted, and it became

his lifetime project. Competent scholars about 10 years junior such as Korean

literature scholar Kim Yun-shik, sociologist Shin Yong-ha and historian Han

Yeong-woo joined him and worked as editorial board members. Kim paid

attention to every detail from contacting writers to editing and proofreading.

Even after being diagnosed with final-stage pancreatic cancer, Kim was at his

desk proofreading every manuscript until a week before his death. Korean

Studies Bulletin was considered the “base” for Korean studies. Although the

journal incurred chronic deficits, Kim’s last wish was respected so its 120th

and last edition was put out four months after his death.

It is difficult, if not impossible, to find academic journals and magazines

comparable to these two periodicals in our society these days. Although the

academia and the publishing industry have grown remarkably in size and their

conditions have improved beyond comparison over these years, few are as

devoted and self-sacrificing as the late Lee Ki-baik and Kim Seong-jae.

Scholars who are oblivious to their communal duties produce numerous papers

like machines and greedy publishers are preoccupied with making profit.

These people are not capable of producing magazines that will influence

society and go down in history. I want to advise those scholars and publishers

who have not yet lost their sight for valuable endeavors to reconsider their role

in light of what these two men did to show us the way through their

publications.

[March 24, 2012]

www.koreafocus.or.kr

Bread over Books, Shoes over Books?

Noh Jae-hyun Editorial Writer The JoongAng Ilbo

On the street, you sometimes come across a sign in front of tire stores that

says, “Wow! Tires are cheaper than shoes!” This is not at all incorrect

considering the wide range of shoe prices. Comparing a person’s shoes to a car

tire even brings a smile.

However, the latest Statistics Korea data on average household spending on

books erases smiles and prompts serious thinking about what is on our feet. A

Korean household consisting of two or more members spent more on shoes

(22,784 won) than on books (20,570 won) a month. This was the first time the

order was reversed since the items began to be tracked in 2003. It was also the

first time that people spent less on books than on bread (20,979 won). Shoes

last about a year or so at the least, but people still spent more on them than

books. Even more alarming is the fact that books here include textbooks and

reference books for students.

Professor Han In-seop teaching law at Seoul National University wrote on

Twitter yesterday, “When your children go to the bookstore to buy a school

workbook, hand them extra cash so that they bring home a book they can read.

If you let them pick a book, they will surely read it because they chose it. To

make the final selection, they will probably go through about 20 books. They

bring home one book, but in their head they have a list of 20 potential reads.

And their minds will have become all the richer.”

Such thoughtful parents seem to be going extinct in Korea. Statistics do not

just fall out of the skies; there is a reason for everything. Last year, a number

of good publishing houses went bankrupt. Itreebook, Ire, Taedongbooks and

Munidang published well-known books such as “Song of the Sword,” “Song

of the String,” “Chicken Soup for the Soul,” “White Night” and “Father.”

Distributors such as KG Book Plus, Saemteo and Pyeonghwadang went bust,

and this year Korea’s largest exclusive agency Susongsa also collapsed.

Smaller publishers are scrambling to survive in the aftermath. People may be

spending less on books because of higher smartphone bills and vigorous

penetration of e-books, but basically it boils down to the tendency to not read.

In a few days, the Ministry of Culture, Sports and Tourism will declare 2012

the “Year of Book Reading.” They will be airing the message, “The time is

now 00 o’clock, your time for reading,” on the radio and TV to launch a read-

20-minutes-a-day campaign, and will encourage bedtime reading for children.

Heavy reader contests and university students’ book debates are planned, but

there is skepticism about how effective these events will be.

There are voices calling for more practical measures to promote publishing.

President Ha Eung-baek of Human & Books Publishing said, “We need to

benchmark the U.K. in levying zero percent VAT on the publishing industry so

that their tax burden on paper and printing is reduced. With a little input, we

can reap great benefits.” The general election is not far away. I would much

prefer such small but concrete vows rather than empty promises that the world

will somehow change for the better.

[March 6, 2012]

www.koreafocus.or.kr

Making Friends in Seoul

Michelle Farnsworth Foreign Client Relationship Manager Shinhan Bank

I have been living and working in Korea for nine years now, and in that time I

have seen many friends come and many friends go. There has been a constant

cycle of farewell parties and new introductions. The routine of making new

friends and letting go of old ones is just as much a part of the long-term expat

experience as homesickness and culture shock. It’s a sad and inescapable

reality.

In my early years in Korea, when I was a happy-go-lucky English teacher

living in the suburbs of Suwon, I found that it was very easy to meet new

friends organically. I would run into another fellow English teacher at the local

Family Mart and the next thing I knew we were best friends, bonding over

similar shared experiences in a foreign land. It felt as though I had so much in

common with nearly everyone I met: we had the same jobs, we spoke a

common language, and we even patronized the same Family Mart! These

factors combined while may not be reason enough to pursue a friendship back

home, but they were enough to not only spark but maintain many meaningful

relationships for me here in Korea.

I haven’t been in the teaching racket for more than five years now and I’ve

noticed that meeting new friends has become more difficult. When I run into

another foreigner at Family Mart we rarely even make eye contact, let alone

strike up a conversation. And even if we do chance to say hello, I don’t usually

feel that instant connection that I used to feel ― just because we are both

foreigners shopping at a Family Mart in Korea does not mean we actually have

anything meaningful in common.

I’m not sure exactly when or why this shift started to happen, but I have a

theory that it is a combination of mainly two factors. First, I think it’s partially

because I’m now moving in a slightly more professional social circle and

befriending transient English teachers who have no stake in Korea does not

interest me so much anymore. Time is precious: if I’m going to invest time

into a relationship, I need to believe there is more to it than just being caught

in the same place at the same time.

Second, I think this shift is also partially because the big city mentality and

Seoul lifestyle hinders me from befriending random foreigners. While there is

still a small and tight-knit foreign community in Seoul, it doesn’t have the

same cohesiveness that it did in a more remote area like Suwon. Living in

Seoul, we are not as desperate for English-speaking friends since they are

potentially all around us.

So, it was about a year ago, perhaps due to this slowly evolving fussiness or

perhaps due to my time-consuming work schedule, that I noticed that my

circle of friends was becoming a little sparse. I was attending all the farewell

parties, but I wasn’t replacing those who left. When I commented on this

situation to a friend one day, she suggested that I join the Seoul International

Women’s Association (SIWA).

My friend was, and still is, actively involved in SIWA. She couldn’t stop

raving about the organization and all the cherished friends she had made

thanks to SIWA. But she is an expat wife with a lot of time on her hands and

many of the SIWA meetings, tours and events are during business hours. How

could I get involved with my busy work schedule?

She noted that the Working Women’s Network chairwoman position had been

unfilled for more than a year and suggested that I should take it on. I wasn’t

sure what being the chairwoman of this committee would entail, but I’m very

happy to report that I accepted the position.

I had a lot of freedom to decide the structure and format of the committee and

I decided to organize meetings that would target and serve other

disenfranchised women like me in search of ideas, inspiration and friends. I

wanted the focus to be on creating a warm, welcoming environment for like-

minded women that allowed time for introductions, conversations, and

budding friendships with other women in similar situations and professions.

Starting with this great pool of ambitious women, it’s almost impossible not to

make meaningful connections.

We now hold mingling and networking events once a month for professional

ladies (both Korean and foreign) in Seoul. These are the friends that I had been

looking for! And there are usually about 30 of them, all gathered in one room

at the same time. It is inspirational and exciting to be a part of such an

interesting, diverse, and most importantly, similar group of women.

I’m so happy that I finally got involved in this group and I regret not getting

involved sooner. I hope more women will take the initiative to approach it and

learn more about the friends that are waiting to meet you in Seoul!

[JoongAng Sunday, March 11, 2012]

www.koreafocus.or.kr

- North Korea’s External Debts: Trend and Characteristics

- North Korea’s Economic System in the Kim Jong-un Era: Prospects for Change and Implications

- Polarizing Business Competitiveness

- Korean Movies from True Stories: Reality and Desire for Myth

North Korea’s External Debts: Trend and Characteristic

Yang Moon-soo Professor of North Korean Economy University of North Korean Studies

I. Introduction

North Korea should begin repaying South Korea’s food loans this year. The

South provided food to the North on six occasions between 2000 and 2007,

delivering a total of 2.4 million tons of rice and 200,000 tons of corn worth

US$720 million. By June 7, Pyongyang is obligated to pay $5,830,000 for $88

million worth of food received in 2000. However, considering the North’s

economic difficulties and strained relations between the two Koreas, payment

is unlikely.

As the payment date approaches, concerns are growing among North Korea

watchers about the overall state of the North’s debts to South Korea, the

former Soviet Union, China, Japan, France, Germany, Britain and other

countries. The scale of the North’s foreign debts is unclear as Pyongyang

rarely provides economic data, particularly in the sensitive area of its external

liabilities. Outsiders’ efforts to access correct figures have not been successful.

This study aims to draw the outline of North Korea’s external debts, but the

author should admit that his observation cannot but be partial and provisional

because of the unavoidable scarcity of data and information.

Part II of this paper briefly reviews North Korea’s external economic relations

during the 1970s, when the socialist state’s foreign debt problems initially

surfaced about the middle of the decade. Part III reviews the debt increase in

the following years. It tries to gauge the overall scale and delves into the

background and causes of repayment problems. Part IV examines special

conditions existing between the North and the respective lender nations.

II. North Korea’s External Economic Relations in the 1970s

1. Change in Economic Policies and Expansion of Trade with the West

North Korea’s external economic policies changed dramatically in the 1970s.

The first sign was massive imports of machinery and plant facilities from

advanced economies, including Japan, France, West Germany and Britain,

beginning in 1972. What was surprising was that trade with these capitalist

nations were made with loans.

As <Table 1> indicates, North Korea in the 1960s incurred foreign loans

mostly from socialist states, but during the next decade, loans from capitalist

states exceeded those from socialist countries. Between 1971 and 1980, North

Korea borrowed $1,292 million from capitalist nations, an amount that

exceeded all of foreign loans that it incurred in the 1960s.

The lending enabled trade between North Korea and the West to expand during

the 1970s. Loans from OECD members were concentrated in the four-year

period of 1972 through 1975 and they naturally led to rapid increases in trade

with these countries. (Refer to <Table 2>.) Imports from the OECD members

outpaced exports from them.

Trade with the OECD members increased drastically in 1972 and peaked in

1974, when the North’s imports from capitalist states, including developing

countries, accounted for 53.7 percent of its total inbound goods, overtaking

those from socialist states for the first time. Imports from the OECD declined

rapidly after 1975.

Pyongyang’s expanded trade with the West produced huge trade deficits.

(Refer to <Table 2> and <Table 3>.) During 1971-75, North Korea’s trade

deficits with OECD nations totaled $1.05 billion and the trade gaps with

socialist states amounted to $970 million. Thus, the deficit figures which were

$242 million in 1961-65 and $400 million in 1966-70 ballooned to $1,932

million in 1971-75. The rapid increase of trade deficits led to the problem of

heavy foreign debts.

Beginning in 1973, when the first global oil shock sharply increased petroleum

prices, North Korea had to spend more for its imports than it earned from

exports. While it was paying more for the imports of machinery and plant

facilities, the prices of non-ferrous metals, including lead and zinc, which were

the North’s main exports, nosedived. In addition, trade demand from Western

industrialized nations fell. (Refer to <Table 3>.)

2. Background to Changes in External Economic Policy

North Korea’s expanded economic relations with the West in the early 1970s

came amid détente between Cold War adversaries. Relations between the

Eastern socialist bloc and the Western capitalist world rapidly improved with

the so-called “ping pong diplomacy” between the United States and China,

U.S. President Richard Nixon’s trip to Beijing in 1971 and his visit to Moscow

the following year. East European countries, which had stagnant economies,

took advantage of the détente by tapping capital from the West.

In the meantime, China opened its doors to former capitalist foes and North

Korea followed suit, establishing diplomatic relations or exchanging trade

offices with a number of European nations. Moreover, an overheated

international financial market and lenders offered loans to the North in 1972 to

early 1973.

North Korea was anxious to achieve its economic development goals under a

six-year plan (1971-76), which it vainly tried to reach two years in advance.

North Korean leaders realized that cooperation with socialist states alone did

not guarantee success and were attracted to the advanced technologies of

Western capitalist states.

In the meantime, dialogue with South Korea started in 1971 for the first time

since the Korean War and the two Koreas issued a joint communiqué on July

4, 1972, pledging bilateral efforts toward peaceful reunification.

In 1972-1973, before the global oil crisis, the prices of gold, silver, lead, zinc

and other export items of North Korea were rising and Pyongyang must have

been confident of its payment capabilities. North Korean leaders had taken

note of South Korea’s economic development through introduction of Western

technologies. All these developments led North Korea into deciding to spur

development with large-scale buildup of manufacturing plants with Western

equipment and financing.

III. North Korea’s Foreign Debt Problems

1. Historical Review

North Korea’s foreign debt problem was exposed for the first time in 1974. In

July that year, the North failed to make an initial down payment for steel

products from Japan and the shipment was suspended. As the news was

reported, North Korea’s other trading partners in Japan and Western Europe

pressed Pyongyang for payment for their exports and some banks dispatched

their representatives to Pyongyang to demand early settlement of its liabilities.

To raise capital, the North issued bonds and obtained new loans but failed to

elicit any significant support from the international financial community. Thus,

in June 1975, North Korea began negotiating payment deferments with major

creditor nations.

In July 1975, Euler Hermes, a leading credit insurer of West Germany,

suspended its credit insurance for exports to North Korea, alerting the related

businesses. About the same time, the Japanese Export-Import Bank refused to

extend loans to North Korea and the Ministry of Trade and Industry virtually

halted insurance for trade with the North. In May 1976, a British private

consulting agency for North Korean trade was closed and European banks

soon held official and unofficial meetings for joint pressure on the North for

debt payments.

By 1977, North Korea had reached debt rescheduling agreements with Japan,

Sweden, West Germany, France, Switzerland and Austria. In negotiations with

West European lenders, North Korea demanded eased payment terms and

replacement with new loans, and finally in July 1987, a group of about 140

European banks declared North Korea a default state. With Japan, North Korea

obtained deferment of import payments for the third time in April 1983, but

Pyongyang suspended payments in January 1984 under the excuse of political

reasons.

North Korea’s loan default has continued and occasional negotiations between

North Korean authorities and Western lenders’ group ended without clear

results. After the dismantling of the Soviet Union in 1989-1991, Russia and

North Korea discussed debt payments but the talks went nowhere. Summing

up, North Korea has been unable to make interest payments, let alone paying

off the principal, since the middle of 1984. Hence the accumulated interest has

surpassed the total principal.

2. Overall Scale and Characteristics of North Korea’s External Debts

Because no official data is available on North Korea’s foreign debts as well as

its major economic indices, including the gross national product, this study has

to rely on estimates by international agencies. The South Korean government

and the OECD released their estimates during the 1980s to the 1990s, but have

not provided any officially recognized data since 2000.

During the 1970s, a number of overseas institutions sporadically produced

provisional North Korean debt figures. The U.S. Congress, for example,

reported that North Korea’s foreign debts amounted to $55 million in 1970,

which soared to $725 million in 1974. The U.S. Central Intelligence Agency

estimated that the North’s external debts stood at $2.4 billion as of the end of

1976, of which $1.4 billion was owed to capitalist states and the rest to

socialist nations. The New York Times and the South Korean government

estimated the North’s total debts at $2.3 billion, while the West German

newspaper, Handelsblatt, reported the total amount reached $2 billion. Based

on these figures, it may well be said that North Korea’s foreign debts in 1976 –

two years after its debt repayment problems surfaced – amounted to

somewhere between $2 billion and $2.4 billion.

Estimates became more complicated in the 1980s and 1990s. (Refer to <Table

4> and <Table 5>.) There were significant gaps between figures provided by

the South Korean government and the OECD, for example. Seoul speculated

that the North’s external debts grew from $2.23 billion in 1980 to $7.86 billion

in 1990 and to $12.46 billion in 2000. The OECD figures were considerably

lower with $4.88 billion for 1990 and $7.43 billion for 1998. According to the

South Korean authorities, the North’s debts to capitalist countries ($2.80

billion) exceeded those to socialist states ($2.41 billion) in 1987 but the table

turned two years later to show $2.74 billion owed to the West and $4.04 billion

to the East.

Regarding North Korea’s external debts after 2000, only scattered and

piecemeal data and estimates have been available. In 2008, Kwon Young-se, a

lawmaker of the Grand National Party, claimed that North Korea owed a total

of $18 billion in debts to about 30 foreign states including China, Russia and

East European nations, attributing the figure to an unnamed intelligence

agency. He said that the amount almost equaled North Korea’s GDP. On

January 1, 2008, Bloomberg reported that the North’s total external debts

amounted to $15 billion. Britain’s Financial Times on August 19, 2010

reported an estimate of $12 billion, of which two-thirds were concentrated in

former socialist states.

It should be noted that any estimate of North Korea’s debts cannot but be

provisional figures, considering that Pyongyang is still negotiating with

lenders for write-offs and rescheduled payments. In addition, currency

exchange and interest rates add to the flexibility of any estimates. One thing

that is certain is that the scale of the North’s foreign debts continues to swell

because of the huge amount of overdue interest.

North Korea’s repayment capabilities can be assessed by comparing its debt

scale to its export volume or GNP, and then comparing these ratios with those

of other nations. (Refer to <Table 6>.) In 1995 North Korea’s ratio of foreign

debts against GNP was slightly above the average of low-income and lower-

middle-income economies. But more noteworthy was the ratio between

external debts and exports. The North, with a small export volume, shows an

extremely high ratio, compared to other low-income countries and even to

Mexico and Hungary, which have even higher debt-to-GNP ratios. The North’s

debt-to-export ratio in 1995 was 10 times higher than the average of low-

income and lower-middle-income economies. These figures clearly reveal the

extremely worrisome status of North Korea’s debt repayment capabilities.

3. Background and Causes of North Korea’s External Debt Problem

North Korea has been under chronic trade deficits since the founding of the

state. To determine why the country’s external debt problems emerged in the

middle of the 1970s, it is necessary to take note of not only its trade volumes

but current account and capital account figures as well as the overall

international balance of payments.

<Table 7> provides clues to why North Korea had no external debt problems

until the early 1970s. It is highly likely that North recorded current account

surpluses during the 1950s, thanks to foreign grants that were abundant

enough to cover its modest trade deficits. Grant-type aid was discontinued in

the 1960s, but the return of Korean residents from Japan during those years

must have meant a substantial amount of foreign capital brought into the

North. This probably helped the North maintain surpluses in international

payments. In the 1970s, however, the capital inflow from Japan declined,

causing a depletion of foreign exchange reserves in North Korea.

There were several important reasons for North Korea’s swelling foreign debt

problems in the middle of the 1970s. First, the unexpected oil shock increased

import payments while export earnings dwindled. Second, North Korea’s

foreign exchange reserves amounted to only $300 million to $400 million,

with its gold reserve worth $56,740,000 and silver $63,140,000, according to

available data. By 1973, the North already was asking Japan to accept iron ore

instead of cash for import payments.

Third, trade deficits continued to expand as the North had few other products

to export when demand for its non-ferrous metals declined. A typical

underdeveloped economy, North Korea had extremely low export

competitiveness as a result of its ill-advised macroeconomic and trade policies.

With limited energy resources, insufficient capital and low technological

capabilities, the North was forced to increase imports of capital goods and

intermediary materials in an effort to pursue industrialization. Without

considering the country’s overseas sales capabilities, North Korean authorities

often decided to import expensive machinery and equipment for political

reasons.

Efforts to increase exports met unsatisfactory results. The North was only able

to sell some raw materials and half-processed products based on its relatively

abundant natural resources. Export of manufactured goods was limited

because of generally low product quality. In North Korea, where goods are

chronically in low supply, producers did not have to care about quality; their

focus was on meeting supply targets.

Fourth, foreign debts rapidly accumulated because North Korea neglected

repayment of loans introduced in the early stages of economic development.

North Korea received large-scale grant aid from abroad in the 1950s, but

foreign credits increased rapidly as grant aid was discontinued and beginning

in the 1970s most capital inflows were made through loans. The maturity of

earlier loans approached while trade deficits swelled. New loans were incurred

to pay overdue interest and principal and the overall scale of external debts

snowballed.

IV. Particularities with Major Creditor States

1. North Korea’s Debts to Russia

1) Russia’s Loans to Developing Countries

Russia’s loans to developing countries involve the complex issues of exchange

rate and debt rescheduling. Russia took over the rights to the external loans

provided by the former Soviet Union and those loans were mostly

denominated in rubles. When the Soviet Union extended loans to developing

countries, the ruble was strong against the dollar with the exchange rate of 0.6

ruble per dollar, but the ruble value plummeted with the collapse of the Soviet

Union and the ensuing economic crisis. The problem of applying adequate

exchange rate for the ruble-denominated loans became a serious issue between

the lender and borrower states.

Most borrowers from Russia are poor countries seeking debt rearrangements

through the intervention of the World Bank, IMF, OECD and the Paris Club.

As it joined the Paris Club in 1997, Russia follows the multilateral debt relief

framework established by the organization of lending nations. For the ruble-

denominated loans signed before January 1, 1992, the exchange rate of 0.6

ruble to the dollar will be applied, but Russia will make upfront discounts of

70 to 80 percent for these loans with the remaining liabilities to be paid in

accordance with the “Naples conditions” providing further reduction by 50 to

67 percent on the basis of the present value of the debt instead of its nominal

value.

Assuming North Korea joins international financial organizations and agrees

to the IMF programs for economic reform, its debts to Russia will be subject

to the debt relief formula of the Paris Club. Otherwise, North Korea could seek

bilateral debt relief negotiations with Russia. If the debt rearrangement Russia

made with Laos is benchmarked, the exchange rate will be 0.6 ruble to the

dollar and a 70 percent discount will be given with a further cut of 20 percent

on the basis of the present value. The result will be a reduction to 24 percent of

the original amount. If the latest “Cologne terms” are applied, liabilities may

be discounted down to 10 percent.

2) North Korea’s Debts to Russia

Relations between Russia and North Korea were strained abruptly following

the dissolution of the Soviet Union. Moves to improve their ties began in the

mid-1990s and the two countries signed a new treaty of amity and cooperation

in 2000 to replace the 1961 friendship pact. Summit talks held in Moscow in

2001 between President Vladimir Putin and North Korea’s Kim Jong-il

produced a joint communiqué, which mentioned the North’s past debts to

Russia as an important matter to be considered in promoting bilateral

economic cooperation.

Throughout the 2000s, the two governments continued negotiations to reassess

North Korea’s debts to the Soviet Union, but no clear-cut result was seen

despite Moscow’s offer of drastic loan cuts. In December 2006, it was reported

that Russian Deputy Finance Minister Sergei Storchak and his North Korean

counterpart Kim Yong-gil agreed that the North’s debt to the former Soviet

Union, amounting to 3.6 billion rubles, would be reappraised at $8 billion and

an 80 percent discount on the amount would be given. Details were to be

resolved before the third meeting of the Russia-North Korea Cooperation

Committee for Trade, Economy, Science and Technology, scheduled to be held

in March 2007.

However, the bilateral cooperation committee only reaffirmed the “principle of

resolution through an adequate agreement,” indicating backpedalling on

negotiations. At the latest fourth committee meeting, held in Pyongyang in

September 2011, Russian Regional Development Minister Victor Basargin and

the North’s External Trade Minister Li Yong-nam signed a 26-point agreement,

but again no concrete accord was made on the North’s debts.

In addition to its 80 percent discount offer in 2006, Russia is reported to have

proposed a 90 percent cut in the 2011 meeting. Deputy Finance Minister

Storchak said in September last year that Russia would give a 90 percent relief

for North Korea’s debts amounting to $11 billion and that the remaining 10

percent might be converted into investments in energy, medicine and other

areas. When Russia signed an MOU with North Korea last August on the

laying of a gas pipeline through the North Korean territory, it reportedly

expressed intent to make a 90 percent debt relief for North Korea.

No final accord has been made, however. Basically, the problem is that North

Korea is not willing to recognize Russia as the legitimate successor to the

Soviet Union. Besides, there has been no agreement on the details of debt

reassessment. Most importantly, North Korea seeks a political settlement of

the debt issue while Russia does not intend to do so. In the third inter-

governmental cooperation committee meeting in March 2007, the North

Korean chief delegate said that his country was not capable of repaying the

Russian credits and that the issue could be resolved through political decision.

As the two governments were unable to reach a final agreement on the amount

of debts to pay, there are only Russian quotations, which ranged from a low of

$8 billion to a high of $11 billion. The higher figure was mentioned by the

deputy finance minister in August 2011, when Kim Jong-il was meeting

Russian President Dmitri Medvedev in Ulan-Ude in eastern Siberia. Russian

media explained that the amount of North Korean debts increased by $3 billion

over the past five years because of overdue interest and penalties for failure to

make payments.

Russia has the final say about the debt issue but many experts agree that

Moscow’s “major decision” is not impossible, considering its ambitions to

gain leadership position in Northeast Asia through grand energy and railway

projects as well as the six-party negotiations for North Korea’s

denuclearization.

2. North Korea’s Debts to China

The most outstanding fact about North Korea’s debts to China is that their

overall scale and the moves between the two countries for their settlement

have remained in almost complete secrecy. The South Korean authorities

speculated in the late 1980s that the total amount could range from $580

million (in 1987) to $100 million (in 1989), but no such approximate estimate

has ever been made since the 1990s.

Following the disintegration of the Soviet Union in 1991, China replaced the

Soviets as the guardian of North Korea, and trade between the two countries

spiked upward. While North Korea recorded large trade deficits, China is

believed to have provided the North with significant amounts of aid in grants

as well as credits. But no estimate is available about the overall scale of

liabilities.

As the above table indicates, trade between North Korea and China increased

dramatically in the 2000s, with the North recording large deficits each year

without an exception. The North’s trade deficits during the decade aggregated

at $6,106 million, which represented a 68.8 percent increase over the

accumulated deficits in the preceding 10 years ($3,618 million). The figure

even exceeded the total trade deficits recorded during the 50 years from 1951

to 2000 ($5,499 million). These large deficit figures raise the question of how

the gap has been coped with. The natural answer is that the North must have

incurred enormous amounts of debts to its neighboring guardian state.

Since the rupture of the socialist bloc, China is known to be providing its

impoverished neighbor with various commodities on credit. About 500,000

tons of crude oil has been delivered annually to North Korea via a pipeline

from Heilongjiang Province. International prices are applied to the oil

shipments but North Korea has presumably been offered concessional credits

for payment. In addition, North Korea receives considerable amounts of food

from China annually, a large portion through commercial transactions and an

unknown amount through grants and concessional credits.

It may well be assumed that the North’s accumulated debts have reached a

high level, especially since the 2000s, but there is no way for outside observers

to know how the two states are seeking ways to settle the liabilities. Since the

North suffered economic difficulties and its reliance on China continued to

deepen amid amicable relations throughout the 2000s, the unpaid debts may

not be too serious a problem yet and political settlements are highly likely.

3. North Korea’s Debts to OECD Members

After North Korea’s external debt problem emerged in the mid-1970s, the

alerted banks of the West formed creditor groups to make joint negotiations. In

March 1977, 31 banks reached a rescheduling agreement with the North’s

Choson (Korea) Trade Bank. North Korean authorities, however, fulfilled only

a part of the agreement and repayment terms were virtually ignored. In 1987, a

total of 140 banks again formed a creditor group represented by Britain’s

Morgan Grenfell and the ANZ (Australia and New Zealand Banking Group),

but negotiations fell apart because of North Korea’s lukewarm attitude.

After these failures, the OECD creditors took remedial steps to save

themselves. They recognized their credits to North Korea as nonperforming

loans and received compensations from export insurers and credit guarantors.

The collected insurance money must be substantial in each member country

but the whole amount has not been confirmed.

Externally, the OECD creditors filed suits against North Korea in August 1990

and in April 1992 with the International Court of Arbitration under the

umbrella of the International Chamber of Commerce. The arbitration court

ruled that the North should pay the requested interest and principal

immediately but the ruling had no binding force.

Noteworthy was that the creditor banks, including ANZ, Morgan Grenfell and

BNP (Banque Nationale de Paris), converted their credits to North Korea into

bonds and began circulating them at low prices to recover their losses, though

in only a small amount. Potential buyers of these bonds may calculate two

possibilities: the bond price could rise when North Korea’s political and

economic situations improve; and South Korea may repay the bonds when the

two Koreas are reunited with the South taking over all outstanding liabilities of

the North. Thus the South should find it hard to pay no heed to the North

Korea bonds issued by the OECD banks.

4. North Korea’s Debts to Japan

North Korea’s failure to make import payments surfaced in Japan in 1974 and

long-term delays over six months were reported in 1975. North Korea and

Japan made debt rescheduling agreements in 1976, 1979 and 1983, but the

North was unable to fulfill them. Especially in 1983 when Japan took

economic sanctions against the North following the terror attack on South

Korean presidential delegation in Yanggon (Rangoon), which was attributed to

North Korean agents, Pyongyang retaliated with a halt to all payments to

Japan.

Meanwhile, the two countries made official contacts occasionally to discuss

debt problems. The Japan-North Korea Settlement Council was set up in 1977

to seek normalization of bilateral economic exchanges, including the North’s

debt repayment. The Korea Trade Bank took charge of payments to Japanese

general trading companies and other private businesses. Then in 1979, Japan

established the East Asia Trading Institute for joint research on the expansion

of economic exchange and study of industries and resources. Japanese

members of the Japan-North Korea Settlement Council visited Pyongyang in

1987 and 1992 to discuss the debt issues with the Korea Trade Bank but they

failed to find concrete solutions. Representatives of the East Asia Trading

Institute also visited the North and heard Pyongyang wanted Tokyo to change

its North Korea policies as a precondition for debt settlement.

In 1986, the Japanese government released export insurance funds to the

general trading firms and other private exporters to cover a part of their losses.

A total of 32 billion yen was released to about 30 companies in accordance

with the Export Insurance Law. It was a move to relieve the difficulties of

private exporters and help normalize trade with North Korea. The Japanese

government thus took over a portion of the North’s liabilities and will try to

settle them when the two countries normalize their relations.

South Korea and Japan set a precedent for comprehensive settlement of mutual

claims and liabilities when they agreed on diplomatic normalization in 1965.

Japan provided South Korea with $300 million in grants, $200 million in

financial loans and another $300 million in commercial credits in addition to

an unspecified sum of commercial loans. With the $300 million grant, South

Korea’s debts to Japan, totaling $45,730,000 by that time, were cancelled.

When calculating the total amount of North Korea’s debts to Japan, it should be recalled that trade settlement between the two countries was made in West German marks until the mid-1970s. Under the yen-mark exchange rate in late 1976, when the two countries had their first debt rescheduling agreement, the principal of Japanese credits should have amounted to about 80 billion yen. North Korea repaid about 10 billion yen before it suspended payments to Japan in January 1984, with some 70 billion yen remaining in arrears. When interest is added to the principal, the total debts could exceed 100 billion yen, or could possibly amount to 200 billion yen depending on interest rates. By the present yen-dollar exchange rate (80 yen to the dollar), the North Korean debts could range between $1.2 billion and $2.4 billion. Given North Korea’s claims to Japan amount to around $10 billion, some 8 to 16 percent of it may go to offsetting the North’s debts to Japan.

V. Conclusion The North Korean problem of external debts began surfacing in the mid-1970s and continued to worsen to reach a virtual default in the 1980s, with interests growing to exceed principals. If the oil shock in the early 1970s was a major external cause of the North’s debt problem, the communist state’s chronic trade deficits continued to undermine its repayment capabilities and aggravate the debt problem. The snowballing external debts obstructed international financial assistance and foreign investment, which are vital for economic recovery. The overall scale of North Korea’s foreign debts is roughly estimated at $12 billion to $18 billion, which could be readjusted depending on debt relief negotiations with lenders. But overdue interests are to offset any cut in the amount of debts. With Russia, there are the problems involving the application of ruble-dollar exchange rates and the scale of debt relief by the international standards. With OECD states, the North Korea bonds circulated by the creditor banks are among notable problems. Japan may seek to settle the North’s outstanding debts through diplomatic normalization with the regime in the future. North Korea’s huge external debts pose a serious problem that cannot be overlooked as the two Koreas will eventually have to achieve reunification. But study on this important issue remains at the rudimentary stage with a critical lack of necessary data and information. The problem seems far more complicated than expected; it requires continued attention with in-depth research.

[KDI Review of the North Korea Economy, March 2012, published by the Korea Development Institute]

www.koreafocus.or.kr

North Korea’s Economic System in the Kim Jong-un Era: Prospects for Change and Implications

Kim Suk-jin Research Fellow Korea Institute for Industrial Economics and Trade

Since the death of North Korea’s National Defense Commission Chairman

Kim Jong-il, the world has been paying extraordinary attention to the country’s

future. Most of the interest is on whether the late leader’s son, Kim Jong-un,

and his supporters will be able to stay in power, but a more fundamental

question is whether or not the country’s policy and system would change. That

is the most important issue for North Korean people’s livelihood and inter-

Korean relations regardless of who controls the impoverished communist state.

This study forecasts North Korea’s future through four possible economic

scenarios: 1) restoration of a planned economy; 2) reform and opening-up

modeled after China and Vietnam; 3) the status quo; and 4) system collapse.

First, the restoration of planned economy will likely be difficult, considering

the fundamental inherent problems attached and North Korea’s weak ability to

acquire economic resources. The possibility of reform and open-door policy

also is low because the new leadership is concerned about political risks

resulting from eased ideological control or the inflow of information about the

outside world. Therefore, the most likely scenario in the short run is

maintaining the status quo by winning resources through economic

cooperation with China or South Korea or through denuclearization talks.

However, considering the North’s exchanges with the outside world are

increasing, the possibilities of reform and opening-up or regime collapse will

increase gradually.

The goal of the South’s North Korea policy should be a market economy and

reunification of the two Koreas in the end. In this regard, Seoul needs to take

extra care in deciding the concrete content and form of economic aid and

cooperation projects. Among the primary requisites are inducing changes in

North Korea’s policy and system, and creating conditions for as many people

from the two Koreas as possible to meet each other and work together.

For a country with a unique system like North Korea, the death of a leader and

subsequent power succession often provide a key opening for system change.

Hence, unusual attention has been on North Korea’s future since the death of

Kim Jong-il last December. In reality, one can’t help doubting whether the

Kim Jong-un regime will be able to control North Korean society effectively

and remain in power. The skepticism is conspicuous because Kim Jong-un, the

young and inexperienced third-generation leader did not have the time to be

sufficiently prepared for ascension to power like his father.

A more fundamental question for the livelihood of ordinary North Koreans and

inter-Korean relations is the policy direction of the North Korean government

whether under Kim Jong-un or another supreme leader. For example, the Kim

Jong-un regime could adopt policies quite different from those of Kim Jong-il,

or it may lose power to someone who implements policies similar to those

under the deceased leader.

North Korea’s Half-baked Socialism

Before looking ahead to possible changes in the North Korean system, it is

necessary to explain its characteristic features. As is well known, North

Korea’s “classical socialism” rested on two pillars ― state ownership of

productive assets (businesses, mines, land, etc.) and a centrally planned

economy ― but the latter collapsed and the socialist structure crumbled in the

early to mid-1990s.

The North’s planned economy, of course, never did work well, falling short of

ambitious forecasts, as in the former Soviet Union. Therefore, it would be

appropriate to say socialism was actually a command economy that was

ordered and controlled by bureaucratic organs, and market transactions were

limited in scale.

After the mid-1990s, North Korea suffered so much economic despair that a

considerable amount of economic activity spun out of bureaucratic control. A

number of residents now eke out their living through free market activities at

“changmadang” (private marketplace) and private production is evident in

agriculture, fishing, mining and manufacturing. Private trading activities with

China also seem to be quite vigorous.

Some regard this phenomenon as the spread of “market” or “market activity,”

but it should be emphasized that North Korea’s markets remain “unofficial”

markets. They fall far short of forming a true market economy, considering the

regime still does not protect property rights and contract implementation, nor

allow the freedom to conduct private business activities. In addition, the

country maintains the public ownership system of productive assets as well as

an official economy dominated by state-run companies and government

agencies, so it would be safe to say North Korea basically retains its socialist

system. Summing up, North Korea has established a dual economic system

composed of official and unofficial activities, which may be dubbed “half-

baked” socialism.

Political Situation and Scenarios for Change in Economic System

The question on what changes might occur in the North Korean economic

system is closely connected to possible changes in the country’s political

situation. One of the reasons that North Korea has neither collapsed nor

reformed and opened itself like other socialist countries lies in its pre-modern

hereditary system of governance.

North Korea’s future political situation can be conjectured under three possible

scenarios. First, Kim Jong-un, vice chairman of the National Defense

Commission, remains the supreme leader and maintains his hereditary regime.

Second, Kim loses power for whatever reason and a new leader or group of

leaders emerges and retains the characteristics of socialist regime. Third, the

North’s socialist regime disintegrates irrespective of who is in control.

As for the future economic system of North Korea, four major possibilities can

be considered. First, the North resurrects its classical socialism, that is, the

regime restores a planned (command) economy. Second, it gradually shifts

toward a market economy by actively introducing reform and openness like

China and Vietnam. Third, it carries on partial socialism not much different

from the present one. Fourth, the socialist regime collapses, leading to radical

system change and reunification.

The three scenarios of change in North Korea’s political situation and the four

possibilities of change in its economic system can be combined as shown in

<Table 1>. The combination can produce 12 cases in purely hypothetical

terms, but those marked X may be excluded as they are considered all but

implausible. In other words, if North Korea’s socialist regime completely

breaks down, the situation may directly lead to radical system change and

reunification.

Possibility of Restoring Planned Economy

If Kim Jong-un succeeds in maintaining the regime, North Korea will likely

return to a planned economy. The hereditary successor can’t help but seek the

legitimacy of his rule in the ideology of his father and grandfather. Actually,

Kim Jong-il also made several attempts that reflected his intention to restore

planned economy.

Given the nature of North Korean political system, the alternative power elite

who may replace Kim Jong-un will likely come from among influential figures

in the existing power group. They basically share their socialistic ideology and

may want to shore up their power through a planned economy. But a reversal

to the past would face obstacles.

The biggest barrier would be in garnering widespread consensus that a

renewed planned economy is desirable and even feasible. A considerable

number of North Koreans would have to support the policy shift, if it is to

succeed. In addition, North Korean bureaucrats and party cadres would have to

exercise extraordinary administrative capacity and demonstrate strong loyalty.

Another obstacle would be finance. The leadership, for its part, would have to

secure investments and other economic resources sufficient to restore the

official industrial economy.

Under the present North Korean circumstances, these conditions are obviously

difficult to meet. Amid the protracted economic difficulties, even the party

cadres, let alone ordinary people, have come to think they can’t rely on the

state for their survival and therefore, each individual should take responsibility

for their own livelihood. A similar phenomenon, dubbed “demoralization,”

occurred in other socialist countries in their final days, when people gave up

hopes and expectations for socialism.

This is the reason for the growing tendency even among major state agencies

and cadres to put the interests of their organizations, families and individuals

ahead of those of the entire nation. Some state-run enterprises and government

agencies have secured financial resources to partially restore their production

capacity since the 2000s, but these moves were not aimed at restoring the

overall planned economy but were attempts by a few power groups with

privileged access to resources to solidify their own economic bases.

Even if North Korea manages to overcome these barriers to rebuild its

industries and recreate the framework of a planned economy, it would face

huge difficulties in achieving long-term stable management and operation of

the restored economic system. A planned economy easily becomes inoperative

due to insufficient incentives and difficulties in communication. Also, with

their unsuccessful experience in managing a planned economy in the 1970s

and 80s, the North Korean authorities must be well aware that rash attempts to

revert to the old ways could trigger a bigger crisis. This was the reason why

the Kim Jong-il regime had to remain in half-baked socialism for a long time.

These circumstances would not change under the new regime.

Possibility of Chinese-style Reform and Openness

If North Korea cannot go back to the classical planned economy, what would

be the alternative it can choose? The most positive way would be to opt for

reform and openness as China and Vietnam have done. Both these countries

have not only attained economic development but their communist parties

have successfully solidified their grip on power through reform and openness.

So they could serve as benchmarks.

But it is important to understand that the reform and opening-up of China and

Vietnam has been sharply different from reforms that appeared in the former

Soviet Union and some East European countries in their latter days of

socialism. The main theme of “reformist socialism” in the former Soviet bloc

was to improve the management of state industries through “decentralized

reforms.” This involved giving managerial autonomy to state enterprises. It

was an attempt to change only the detailed methods of economic governance

while maintaining the basic socialist frame of property ownership and

bureaucratic control.

What appeared in the reform and opening-up of China and Vietnam, on the

other hand, was a nascent form of private economy. It included the

dismantlement of collective farms and establishment of family farming as well

as growth of private businesses, clearly deviating from the socialist system.

The previous socialist ideology antagonized private business activity, but the

communist parties in China and Vietnam gradually permitted private business

activities before completely liberalizing them later. Thus, the reform and

opening-up in China and Vietnam can be viewed as a phased process of

fundamentally shedding socialist ideology and parameters.

There is one more caveat: To introduce reform and openness like China and

Vietnam does not mean simply mimicking what they did. As different

countries have different circumstances, it is neither possible nor desirable to

exactly follow other countries’ footsteps. China and Vietnam also showed

considerable differences in their reform. Also, adopting similar policies would

not automatically put North Korea in the same league as China and Vietnam.

For example, even if North Korea sets up and operates special economic

zones, it would be hard to say the regime is seeking reform and openness

unless it introduces market-oriented reforms throughout its economy.

North Korea has not actively pushed for reform and openness so far probably

because of its concerns about political risks. Reform and openness requires the

support of a new ideology. Relaxation of conventional political and ideological

suppression and control to a certain extent is inevitable. As seen in the case of

perestroika that the erstwhile Soviet Union pursued in the 1980s, however,

excessive relaxation of control is highly likely to lead to political crisis, and as

a consequence, the regime’s collapse. When they introduced reform and

openness, the communist parties of China and Vietnam had greater influence

on their populace and better governance abilities than their Soviet and East

European counterparts. But North Korea’s ruling elite of today seems to lack

such self-confidence.

As North Korea’s economic difficulties worsen and the gap with China and

South Korea grows wider, however, the power elite in Pyongyang may

eventually want to revive their anemic economy through gradual reform and

openness. North Korea has drastically increased economic exchange with

China and South Korea over the past decade, which should be regarded as a

step forward from its previous policy. Also, North Korean leaders might try to

win the support of the general public by easing oppression and control on their

unofficial economic activities.

As stressed earlier, however, there is a big difference between moving

somewhat closer toward reform and opening-up and implementing “real”

reform and openness. If North can say it is adopting genuine reform and open-

door policies, it should bring about far more fundamental policy changes, such

as the dismantlement of collective farms, legalization of urban private

economy and private business activity, and liberalization of foreign trade, as

well as ideological emancipation that can justify these policy reversals. In

addition, there should be a number of people armed with a reform-oriented

mindset to spearhead reform and opening-up, not only from among the high-

level power elite but from mid- to low-level cadres. Experiences of other

countries show such a reform-minded elite class was largely formed during

power transfer and consequent generational transition.

In this regard, the death of Kim Jong-il could be seen as one of the important

factors in enhancing the chances of reform and opening-up in North Korea. In

the course of the new leader Kim Jong-un solidifying his power base, a

gradual generational change can take place in the North’s power elite, and the

new-generation leaders are likely to be more reform-oriented than the old

ones. On the other hand, Kim Jong-un has disadvantages in pushing for

ideological emancipation, a prerequisite for reform and opening-up, as he is a

hereditary successor to his father.

Even in case Kim Jong-un proves to be incompetent and is replaced, the

chances of reform and opening-up can swing either up or down. The new

leadership that ousts Kim Jong-un could be either conservatives who stick to

the old system, or reformists who try to experiment reform and openness. As

there is no way to know the real dynamics within the North Korean power

elite, it is very hard for now to guess which group would have the advantage in

a power shift. However, considering North Korea’s younger generations have

undergone totally different life experiences from those of older ones and are

living in ways far removed from socialist ideology, chances are high that an

increasing number of people, not only ordinary citizens but elite groups as

well, will aspire for reforms as time passes and generations change. In this

regard, one may expect the possibility of reform and openness to grow

gradually in North Korea as years go by.

Future of the Strategy to Maintain Status Quo

Reform and openness is an attractive alternative, but not an easy one in that it

requires extraordinary political capacity. And this seemed to be the reason the

Kim Jong-il regime had no other choice but to maintain the status quo without

fundamental policy changes despite prolonged economic difficulties. The

strategy to preserve the status quo does not of course mean doing nothing.

Over the past decade, the Kim Jong-il regime tried to pull off inter-Korean

economic cooperation and economic aid through two summits, continued to

hold negotiations with the United States, and showed signs of enhancing

economic cooperation with China. Acquiring economic resources through

external relations was North Korea’s main strategy to preserve the status quo.

At this juncture, there is a question to ponder. It is how to evaluate the

prospect of North Korea introducing massive foreign aid to implement the so-

called “developmental dictatorship,” thereby overcoming economic

difficulties, if the secretive communist state normalizes diplomatic relations

with other countries.

Developmental dictatorship is a common term, but it is not easy to define.

Simply put, it means a dictatorial regime implementing a powerful economic

development policy. What matters, however, is the content of such a policy.

Classical socialism provided the typical approach of dictatorial regimes

pursuing forceful economic development through a centralized command

structure. As mentioned earlier, however, North Korea today lacks the general

conditions for such a powerful policy for economic development.

South Korea in the Park Chung-hee era (1961-1979) is often cited as an

outstanding example of successful developmental dictatorship, but it should be

understood that South Korea’s economic development was thoroughly based

on private property ownership, market economy and private business

activities. China after reform and opening-up offers another notable example

of developmental dictatorship. The Chinese case, however, exemplifies a

transitional model evolving toward a market economy, which is different from

both the classical socialism of the former Soviet bloc and South Korea’s

economic development model. In other words, assuming that North Korea

implements developmental dictatorship, the pivotal factor would be what kind

of economic system it is based on. That leads to a conclusion that

developmental dictatorship itself cannot be an independent scenario.

North Korea could push for economic development through external

exchanges by either strengthening economic cooperation with China or

receiving massive assistance through diplomatic normalization with South

Korea, the United States and Japan. But without fundamental change to its

current economic system, all those efforts would amount to little more than the

preservation of the status quo.

From a broader perspective, one can see dictatorial regimes in not a few low-

income developing countries maintain their power bases by using aid money

from abroad instead of implementing substantial economic reforms. In some

developing countries, the power elite mainly relies on their natural resources,

but the results are largely the same whether they attain funds from exporting

commodities or foreign lenders and donors. These countries also have an

official economy controlled by power elite and unofficial economy in which

ordinary people eke out their living. North Korea of today seems to be under

similar circumstances.

If one doesn’t stop at North Korea and looks at low-income developing

countries as a whole, relatively few of them have adopted scenarios for

planned economy or reform and openness. Most of them make ends meet with

external aid. Whether they opt for planned economy or market economy, it is

very difficult to fundamentally change an economic system, while winning

economic resources from the outside world is much easier. Viewed from this

perspective, North Korea will most likely adopt a policy that maintains the

status quo, regardless of whether Kim Jong-un continues to rule or is replaced.

Will North Korea be able to overcome economic difficulties solely by securing

sufficient economic aid from abroad and not transforming its system? If global

experiences are any guide, one can’t help but become skeptical. A number of

low-income developing countries have failed to attain economic development

despite long-term, massive foreign aid, because they stopped short of

implementing fundamental systemic reforms. In North Korea, too,

development projects are highly likely to end up as failures even if Pyongyang

receives massive foreign aid, as its lack of systemic reforms would lead to lack

of economic efficiency. Chance are high the North’s economic situation would

get better than now, but long-term, sustainable growth is hard to expect.

North Korea could follow the path of many dictatorial regimes, who subsisted

long on foreign aid. As long as it retains effective political controls, the North

Korean status quo could survive for a considerable time. But system survival

would not be indefinite. Dependence on exchanges with foreigners would

inevitably lead to continuous spread of information about the outside world

and formation of interest groups benefitting from external exchanges within

the elite class, which in turn will most probably spawn aspirations for change.

If the existing power group accepts such aspirations while sticking to power

and maintaining political stability, it would lead to reform and openness. On

the contrary, if it fails to stay in power or the regime falls apart in the process,

it would result in radical system change and start of reunification. Considering

all these variables, North Korea will very likely seek to preserve the status quo

in the short run, but, in the long run, it is increasingly likely to opt for reform

and opening-up or move in the direction of eventual collapse.

Implications for North Korea Policy

The future of the Kim Jong-un regime can exert a great influence on inter-

Korean relations and the entire Korean nation. Far more important in this

regard is in which direction the North Korean system will change than whether

or not Kim can stay in power.

From a long-term, fundamental point of view, it seems more desirable for

North Korea to move toward a market economy through reform and opening-

up rather than returning to planned economy or preserving the status quo.

Some even believe that the socialist regime should collapse, leading to radical

system change and opening the reunification process as soon as possible. It is

hard to say which is more desirable ― reform and openness or system

collapse. It involves quite subjective judgment. It must be pointed out,

however, that political and economic preparations are necessary for a possible

regime collapse and the start of reunification process, as it will accompany

enormous confusion and cost. In any way, South Korea’s goal in its North

Korea policy should be to induce the North Korean system to shift to a market

economy and ultimately attain territorial reunification, through either reform

and openness or system collapse.

Then, what would be the ways to facilitate North Korea’s system change? It is

necessary to encourage North Korea to increase exchanges with the outside

world, including South Korea, in ways that help an increasing number of

North Koreans to benefit from the process, have more access to information

about the world society, and aspire for reform. The South Korean government

has made various attempts to offer aid to North Korea and promote inter-

Korean economic cooperation over the past decade or so.

It is difficult to rule out the possibility, however, that the South’s aid and

economic cooperation would only help the North preserve its current system.

Economic resources from the outside world can serve as important means of

enabling North Korea to endure economic hardship without reform. Inter-

Korean economic assistance and cooperation projects can either expedite or

deter North Korea’s systemic transformation, depending on ways they are

implemented. If the North Korean authorities can acquire economic resources

without extensive contacts between people from the two sides, it is highly

likely to hinder system change in the North. On the other hand, if aid and

cooperation projects are carried out in ways to encourage North Korea to

introduce policy and system changes and allow as many South and North

Koreans to meet each other and work together, it will likely speed up reform

and openness, and eventual system collapse.

It is one thing to understand the conceptual implications of North Korea

policy, and it is another to devise action plans and execute them in effective

ways. The North Korean regime cannot help but worry about its political

security, so it has the tendency to be wary about and guard against all South

Korean policies toward the North, rejecting even reasonable and mutually

beneficial ones. In order to push through its policy to facilitate the North’s

reform and openness, South Korea should draw up wise policies and make

persistent efforts to conduct dialogue with North Korea.

[Economics of Korean Unification, Vol. 1, 2012, published by the Hyundai Research Institute]

www.koreafocus.or.kr

Polarizing Business Competitiveness

Woo Cheon-sik Senior Fellow Korea Development Institute

I. Overview

Polarization of industry and business and widening gaps in competitiveness

and performance have been spreading across the sectors and intensifying amid

the recent economic recession and slow growth. Tangible polarization, as seen

in the performance differences among various economic areas (industries,

sectors, business category and size, employment/income groups, etc.), is

deepening into “omni-directional and individual polarization,” the gaps ever

widening among individual players within the same group.

If employment and income polarization is included, the internal and external

factors of polarization form a vicious circle of “achievement gaps among

industries and businesses ―> gaps in income and employment ―> gaps in

innovation base (human resources, investment in research and development)

―> back to the gaps among industries and businesses.”

Economic recovery is expected to partially relieve the problem, but structural

factors at home and overseas will very likely continue, sustaining or

intensifying polarization. The growth rate cannot be expected to rebound in the

short to mid term. Besides, this is not an issue that can be resolved through

economic recovery alone.

In order to tackle the widening gaps amid slow growth, a two-track strategy is

required to maximize the growth potential of competitive sectors while

improving the capability of struggling sectors. In other words, shared growth

should be sought through market opening and policy reforms for service

industries and small and medium companies.

Due to the accelerating polarization among individual players, the average

performance of a specific group is not significant anymore. More specialized

and differentiated approaches are required to address problems faced by

individual players, for which overall restructuring of policy infrastructure is

necessary.

II. Development Trend of Polarization

In a polarized economy, the widening performance gap (productivity, profit,

etc.) between competitive and weak sectors (industry/business

categories/companies) increases the proportion of employment in the laggards,

eroding the distribution structure of the entire economy. This kind of

polarization gradually emerged in the 1990s and accelerated after the 1997

currency crisis. In the early 2000s, polarization continued to intensify due to

cyclical factors such as weak domestic demand.

1) Main factor in the first phase (1990 to the present): Employment in the

manufacturing sector fell by 11 percentage points from 28 percent in 1989 to

17 percent in 2010, while productivity soared. Meanwhile, employment rose in

the service sector in spite of stagnating productivity. Deindustrialization has

proceeded much faster in Korea than in most industrialized countries, but the

productivity (wages) of the nation’s service sector remains far lower than that

of manufacturing. As of 2009, the service sector accounted for 60 percent of

GDP and 67 percent of employment, but its productivity hovered around 40

percent of manufacturing sector’s, compared to 80 to 100 percent in industrial

countries.

2) Main factor in the second phase (since the currency crisis to the

present): Large conglomerates with high productivity and high growth (key

manufacturing, finance and insurance, construction, etc.) reduced their

workforce substantially, leading to steep increases in employment at small and

medium-sized firms and subsistence-type service businesses with low

productivity.

3) Main factor in the third phase (since economic recession): Amid the

remarkable corporatization trend of local service providers, traditional

manufacturing, service, transportation and construction businesses faced

tumbling domestic demand. Recession in these already overcrowded sectors

dealt a severe blow to employment and income in the middle to lower income

classes, leaving numerous small-time business owners and temporary day

labors jobless.

Around the mid-2000s, the overall economy began to show new structural

changes amid increasing polarization among businesses as the industrial and

corporate restructuring triggered by the currency crisis neared completion. The

changes included decline of innovative small and medium companies,

emergence of knowledge-intensive service companies, and phenomenal

growth of the top 10 conglomerates into global multinational enterprises.

III. Causes and Prospects of Polarization

Polarization was caused by a combination of three structural factors (see

<Figure 1>): rapid changes in the domestic and global economic environment;

vulnerability of the industrial and employment structures at home; and delays

and accumulated problems in policy response. Polarization is expected to

continue in the mid to long term and may even intensify.

In regard to the vulnerable industrial and employment structures, the major

problems are the weak core parts and material suppliers, who are considered

the “backbone of industry,” and a hefty proportion of self-employed small

business owners.

Due to the weakness of their suppliers, a growing number of core intermediate

goods have been outsourced since the mid-1990s. Therefore, the outstanding

achievements of highly productive and export-based sectors mainly led by a

few large conglomerates, such as IT and automobiles, have not fully led to

additional domestic demand. Added value from exports has fallen from 0.71 in

1993 to 0.63 in 2000 and again to 0.56 in 2009. Meanwhile, import

dependency for intermediate goods has risen from 18.8 percent in 1990 to 24.7

percent in 2009.

The proportion of self-employed small business owners has been trending

downward but still stands at the 30 percent level, the highest among the OECD

member countries in both manufacturing and service industries.

It is expected that not only the majority of businesses in light industry (about 6

percent of total employment) but also small companies in heavy and chemical

industries (about 5 percent of total employment) and small-scale farms (about

50 percent of farm households) will remain marginalized.

It is also forecast that the majority of subsistence-type small service firms and

builders, which served as primary employment providers after the currency

crisis, have recently undergone extensive restructuring driven mainly by major

enterprises. These vulnerable businesses will face increasing marginalization

in the years ahead.

IV. Basic Direction in Policy Response and Core Tasks

The current polarization across all industries is an inevitable process of

restructuring for the advancement of Korean economy. The recession also has

positive effects of resolving the factors of economic restructuring that

accumulated before the currency crisis.

Compared with industrial countries, Korea has significant structural problems

in its economy, including a huge proportion of the self-employed and

immaturity of corporate-type service providers with high productivity in the

business and social welfare services sectors. This means there is a great need

for improvement as well as possibilities through restructuring.

In the services sector that remains seriously backward, policy efforts in recent

years have brought about significant systematic improvement in productivity

and competitiveness. For example, the current administration carried out the

“fifth comprehensive measures” and the “13th measures.” Hence the service

industry is making noticeable moves toward structural and qualitative

development.

It is necessary to improve the environment of market competition toward

facilitating a smooth transition of “business and people” into high productivity

sectors, increase support for economic players with innovative potential to

encourage investment in technological manpower, and strengthen social

protection for the perpetually vulnerable working class.

Government policy should basically be geared for support to “people” instead

of “businesses/institutions.” For businesses, the government should create a

competitive market environment complying with global standards. Social

protection should be strengthened for companies with marginal abilities to

cope with the changing business environment and vulnerable working classes,

including elderly small-scale farmers and subsistence-type small business

owners, thereby inducing youths and experienced workers into public and

welfare service sectors.

1. Major Policy Tasks for Business

An effective support system needs to be built to introduce a regional cluster

policy for parts and materials, textiles and garments, food and beverage, and

other light industries, which have not been provided with policy support

commensurate with their business value and economic contributions.

As for the service sector, anti-competitive institutions and practices must be

abolished by reforming business organizations and strengthening the role of

regional governments. At the same time, a systemic reform is also needed to

provide as much policy support to the service sector as manufacturing.

In order to fill the vacuum of mid-tier companies and help them join a

competitive market environment, there should be continuous efforts to absorb

external resources. Considering the latest trend of multi-polarity in the global

economy, Korea should strengthen its strategic inroads into newly emerging

markets such as Southeast Asia, the Middle East and Latin America. Also, an

innovative strategy is necessary to encourage foreign investment which is

stagnant. Korea needs to attract European and American investment into its

strategic business services and especially the European middle-tier and small

and medium-sized companies in the parts and materials sector.

2. Major Policy Tasks for People

The government should encourage investment in human resources

development driven by the private sector, not to mention education, for active

job transfers, business shifts and start-ups. Through a balanced combination of

public and private financial resources, active support has to be provided for

investment in people.

Among necessary measures are loans and scholarships (work study

scholarships and full grant scholarships) for students from low-income

families and drastic improvement in re-education programs for experienced

workers including those in the service industry. To this end, it is necessary to

create funds to increase financial support and devise ways to vitalize private

financial markets.

In particular, specialized job transfer program should be strengthened for mid-

career skilled workers dismissed in the restructuring process. They may be

utilized as managerial resources to reform small and medium-sized companies,

thus expanding the market for specialized business services. The government

should also consider ways to widen the social safety net for those who are

excluded from social protection under the current system, including farmers

and non-salaried workers in service industries.

Government programs and policy implementation systems related with

education, labor and welfare for regional-based adult education and training

should be reformed at front-line enforcement agencies. Regional governments

and business organizations need to be encouraged to actively participate in

policy implementation for education and training, information provision and

improvement of workplace environments through systematic reorganization of

business organizations for efficient learning.

3. Improving the Conditions for Policy Implementation

For the services sector, the existing laws and regulations and policy execution

system should be improved on the basis of comprehensive reviews and

evaluation of concerned statutes and agencies. A basic law for governing

service industries should be legislated to help resolve conflicting interests and

create momentum for a policy shift.

For small and medium-sized companies, the policy implementation system and

governance structure should be reshaped in ways that improve the capability

of policy authorities and increase the participation of regional governments

and innovation leaders. It is also necessary to rationalize and settle policies

and projects related with building a regional innovation system.

[Excerpted from presentation at the fifth KDI Open Forum for Reviewing Korean Economy,

March 20, 2012, organized by the Korea Development Institute] www.koreafocus.or.kr

Korean Movies from True Stories: Reality and Desire for Myth

Kim Young-jin Film Critic & Professor Department of Film and Musical Myongji University

Following the release of “The Crucible” (“Dogani” in Korean), movies based

on reality or promoted as such have been all the rage. “Unbowed,” released in

January, was a huge hit as it rode on society’s mistrust of the judicial system.

The main actors and staff worked on this movie without pay so production

costs did not top 500 million won. By early February the movie had drawn

three million people, and excluding relative differences in scale, this makes it

as successful as the 2009 independent movie hit “Old Partner,” which cost 100

million won to produce.

“Nameless Gangster: Rules of Time,” is a fictional portrayal of the

government’s declared war against crime under President Roh Tae-woo (1987-

1992). Nevertheless, by infusing the screen with the tone and texture of true

events, the film has been just as successful as “Unbowed.”

This trend in the box office gives us many interesting points to ponder. First, it

is evident that blockbuster-style movies no longer should be considered the

only way to overcome the limits of the domestic market. The fact that movies

based on true stories or inspired by them have attracted moviegoers shows that

viewer tastes have changed. In “Unbowed,” the most interesting moments are

not those dealing with the life of the protagonist, Professor Kim Myeong-ho,

but the scenes inside the court. The events, unbelievable if they were not true,

make for a legal drama quite different from Hollywood fare, and the

appearance of the eccentric protagonist has strong dramatic appeal.

Similarly, “Nameless Gangster” does not have the traits of a Hollywood

gangster or noire film. Instead the drama is driven by strong regional color in

the social atmosphere and characters portrayed. Throughout the movie there

are moments when the movie departs so wildly from genre conventions that it

seems to be parodying the great Hollywood gangster flicks. For example, the

lives of the leading characters are totally devoid of tragic dignity. A stronger

feeling in the movie is the sense of compassion for the somewhat pitiful

characters and ridicule and satire of Korean society for the way it operates

through personal connections.

Star Persona and the Trap of Genre Conventions

The movie business tends to rely on star persona and genre conventions as a

safe way to generate sustainable profits. But such devices don’t work that well

in Korea, as there is no well-established formula for matching stars with

certain genres. For example, over the past few years, Jang Dong-gun has

consciously styled himself as a blockbuster hero. But from “Typhoon” to

“Warrior’s Way” and now to “My Way,” the results have not been so good.

Even the craftsmanship of Kang Je-gyu, the Korean director considered to be

the best in blockbuster movies, has not been able to save Jang. In fact, it even

seems that Jang has dug his own grave.

“My Way” is based on a real person. The idea was taken from the book “D

Day” by Stephen E. Ambrose. It mentions a Korean soldier in German

prisoner of war uniform captured by the Allied forces after their landing in

Normandy, France, during World War II. The Korean soldier had been

captured by the Japanese army and then taken by the Soviet Union. He then

was captured by the Germans, and dressed in a German uniform was assigned

to hard labor in Normandy, where Allied troops come upon him. Thus, his life

is marked with the misery of Korea’s situation in the early 20th century, when

the country stood on the fringes of world war. But on the other hand, he could

be called one very lucky man. With a strong will to survive, he endures his

horrific fate.

There would have been several ways of turning this story into fiction. But “My

Way” took the easiest and consequently the most tedious route. The historical

background to the story has been used as so much toilet paper to turn Jang into

a screen hero. He is a superhuman being who looks good no matter what the

situation. The scene with Jang Dong-gun and Japanese star Joe Odagiri

playing soccer in Normandy dressed in German military uniforms, a scene

ridiculed by many, has no effect other than to blatantly mythicize the stars

from Korea and Japan against an historical backdrop. As this silly strategy is

used without blending into the storyline, audiences found it hard to hold back

their laughter.

The character that was properly fleshed out as a human being was “Anton”

played by Kim In-gwon, but he can’t be the lead. At times he moves the

audience as the story focuses on him but he falls far short of being a central

axis to the plot.

If “My Way” is an example of the star persona engulfing the genre

conventions, “Perfect Game” is the opposite case, with the genre conventions

consuming the star persona. The acting by Yang Dong-geun and Jo Seung-

woo, who play real baseball pitchers Choi Dong-won and Sun Dong-yeol,

respectively, is first-rate. The legendary, 15-inning pitching battle between

Choi and Sun is a perfect movie subject. This kind of story was possible only

because it was based on real life. Perhaps the makers were afraid of pushing

ahead with the story in a straightforward manner, for the movie presents

people and incidents that keep the audience on the edge of their seats.

The character Park Min-su, a second rank player for the Haitai Tigers, is a

father and generally the most incompetent player on the team, but at the

crucial moment he makes a big hit. With this move, however, the honesty of

the real life match becomes quickly mired in melodramatic exaggeration. The

same goes for the female reporter for a sports newspaper who rails against the

Chun Doo-hwan government’s policy to keep the people ignorant of politics

by making them addicted to sports. Wary of pro baseball at first, gradually she

falls in love with the men’s game, and instead of being an observer she

chooses to lose herself in the narrative. It’s a move clearly aimed at evoking

melodramatic empathy.

I believe the dramatic unpredictability of “Perfect Game” would have been

much stronger if it had more actively explored the characters inside and out

rather than using the typical narrative style of its genre. It must be remembered

that Choi and Sun were not only sports symbols of their time, but stars who are

hard to find in any other era. Choi, in particular, is such a star. While Sun was

a strictly self-disciplined pitcher, Choi from his high school days would step

up to the mound at any time if his teammates asked him, regardless of his

physical condition. He was like that before and after he became a professional

player.

In 1987 when the legendary game of the movie took place, Choi was a falling

star while Sun was a rising one. Choi was older and had pushed his body hard.

In his college days, Choi once pitched for 27 innings straight. When he was on

the Lotte team, he once came to the mound for six days straight. In the 1984

championship series, he pitched four winning games out of five for Lotte. But

did the movie deal with the inner world of such a man? Not really. It brings to

mind another movie, “Mr. Gam’s Victory,” also based on a real person, which

made the same wrong moves. When a movie is based on non-fiction, the key

to success is finding balance in the use of genre conventions. In this respect,

“Perfect Game” played it too safe and never outwitted the audience’s

predictions.

Differences in Interpretation of Reality

In the same light, “Unbowed” does not get high marks either. The story

unfolds in irregular fashion, the acting is uneven, and there is nothing new

about the way the main incident evolves or how the secondary characters are

linked to it. For example, the lawyer representing the lead, Professor Kim

Gyeong-ho, and the journalist reporting on his case are university alumni; but

using this kind of connection as leverage for the plot is old hat. And while the

actors are partially to blame, it is true that they haven’t been given good

conditions to work with. The lawyer must be able to speak indirectly for the

protagonist inside and outside the courtroom, but throughout the movie he

never quite fits in. He is only a convenient character used to convey the idea

that standing by Kim’s side is like upholding social justice.

However, the real incident on which the movie is based is much more

complex. The real person behind Kim Gyeong-ho’s character is Kim Myeong-

ho, a math professor at Sungkyunkwan University. While making a stand

regarding public notice of a mistake in the college entrance exam, Kim

Myeong-ho clashes with his colleagues and alienates school authorities, who

deny him tenure. When the court rules in favor of the university, Kim later

points a bow and arrow at one of the judges who rendered the decision.

That is about all the public knows about the case, but it is much more

complicated. Professor Kim Myeong-ho was known to be an eccentric,

stubborn person who never listened to others. Although he could have been

saved by the law, his own mercurial behavior botches the case, and he ends up

in court for threatening the judge with a bow and arrow. That would be a more

balanced interpretation of the case, reflecting both sides, but the case was

celebrated as resistance against those who cover up the truth.

Director Jeong Ji-yeong created the movie’s most impressive moment in a

courtroom scene. First, he cast for the lead Ahn Sung-ki, an actor generally

liked and respected, and makes him play an anti-hero with anti-establishment

DNA. Different to what he has hitherto shown on the screen, Ahn aggressively

brings to life an honest “madman.” When the judge cuts in on what he’s

saying, he roars and tells the judge not to interrupt, and in court he proclaims

that he will sue both the judge and the prosecutor. Thanks to the power of the

character, the audience grows to like him even without bringing in some grand

cause.

In the movie, Kim Gyeong-ho is not insisting that he is right: he admits to his

threatening act in part but argues that he never shot the arrow. At the same

time, he berates the court and prosecution for omitting his own evidence,

which punctures the prosecution’s argument that Kim shot an arrow at the

judge. Microscopic scrutiny of the character creates great waves.

Actors Moon Sung-geun and Lee Kyeong-yeong have a wonderful presence as

judges. Moon’s tough and shameless behavior is a vibrant depiction of the

sense of superiority felt by the powerful, who believe they cannot be hurt by

any attack. Meanwhile, Lee delivers an unforgettable portrayal of a judge who

is constantly undecided and hesitant but has no thoughts of changing his

stance. These judges were ready to try the case as a routine matter, and the

vagueness of their expressions vividly shows people in power who cannot be

persuaded in any direction. Such character description, keeping some distance

from the categorization of people into good and bad, seems to show the proper

approach to communicating reality.

So while this movie is said to be based on a true story, it is a dramatized

adaptation with strong appeal that rides on the general atmosphere of Korean

society today where mistrust of the judiciary has surged, thereby reflecting a

factional attitude. As such, the argument as to whether the movie is fiction or

based on reality is a waste of time. There is no such thing as an absolutely

objective fact. Depending on the context, a fact can be differently interpreted.

In “Unbowed,” the facts and court transcripts have been put into a dramatized

context under the proposition of “achieving legal justice.” The only difference

is whether one agrees or disagrees with this proposition. Debate on whether a

storyline is true or not and whether we can believe it or not, has long been

banished from modern art, which has already accommodated the multiplicity

of reality. Putting aside the issue of whether or not “Unbowed” is a true

political movie, it cannot be said the movie has violated the ethical boundaries

of a commercial movie.

Ironic Overturning of Genre Conventions

Director Yoon Jong-bin’s “Nameless Gangster: Rules of Time” presents more

complicated issues for discussion. This movie, set in the 1980s, is about a

corruption case involving a customs officer and a distant relative, who is the

boss of an organized criminal gang. Though said to be fiction, the movie

creates a sense of déjà vu and tricks the audience into thinking that the plot is

true. The story of the rise of a former customs officer, Choi Ik-hwan (played

by Choi Mink-sik), who takes on the role of right-hand man to his relative is

quite convincing. The rise and fall of the protagonist is little different to that

seen in most gangster movies: the hero’s grand ambition makes him a success

but also leads to his ruin.

What is not typical of a gangster movie is the way the leading character is

portrayed. Choi Ik-hwan never commits violence himself. He is not a man who

equates ambition with violence and overpowers those around him, hence

bringing on his own ruin. He achieves success by using those around him who

live by violence and discards them when they are no longer useful. He stands

on the fringes of power, which is symbolic of violence, and quickly realizes

that real violence lays in political power. The gang boss, Choi Hyeong-bae,

who is young enough to be his nephew, occasionally asks him about his real

motives. He knows his relative is not a gangster and tells him to stop acting

like one. But while Choi Ik-hwan may not be a gangster, he is also not one of

the powerful either. He is simply an opportunist and success seeker who lives

off the powerful as he does his own networking.

There is no way such a character can have any dignity. This means he cannot

be a tragic hero, and the same goes for the boss and the members of his gang.

They are too young, unlike the elderly gangsters of Hollywood. They are not

only young but are also short-lived. In this sense they are different to gangsters

in Western culture, whose organization is inherited by the next generation

turning to a legitimate line of business. But nothing lasts forever, and there are

severe fluctuations in the rise and fall of business, which makes for increased

drama and a rampage of betrayal and fraud. In such circumstances, the boss

calling Choi Ik-hwan “the Godfather” is not just a friendly way of addressing

an older distant relative but a device that makes the audience laugh.

There is a world of difference between “Nameless Gangster” and the

romanticized and mythical mafia family depicted in Francis Ford Coppola’s

“The Godfather.” The reality of this movie, the world of high officials and

mobsters who outwardly swagger and strut and think nothing of betrayal and

fraud, cruelly tears down mythical faith in the movie based on genre

conventions.

Movies have an aesthetic and ethical duty to truthfully observe the conflicts in

reality. At the same time, they should serve as a buffer to mediate and solve

those conflicts. For this reason many movies have become modern myths.

Putting such myths together is not as easy as one may think. A world only

filled with myths is not healthy. On the other hand, neither is a world filled

only with dry observation of reality. It is a healthy sign that Korean movies are

acting as a filter to reality. Over the past few years, mainstream Korean movies

have barely reflected the contemporary world. Only now do they seem to be

finding their place. Hopefully, in the future we will be able to see more

balanced movies that act as a filter to reality and a medium between reality and

myth.

[Quarterly Zeitgeist (Sidae Jeongsin), Spring 2012, published by Sidae Jeongsin Co.]

www.koreafocus.or.kr

- Activist Asserts the Lives of North Korean Defectors Should Come ahead of Ideology

- Architectural Hallyu Attracts Young Architects from Abroad

Activist Asserts the Lives of North Korean Defectors Should Come ahead of Ideology

Heo Mun-myeong Staff Reporter The Dong-a Ilbo

On February 21, several celebrities, including actor Cha In-pyo, and a group of

teenagers held a press conference in front of the Chinese Embassy in Seoul to

call on China to stop repatriating North Korean defectors. Most of the

teenagers wore white masks to protect their identity as they held signs saying

“Save My Friend,” and tearfully pleaded for the protection of North Korean

defectors in China.

The young activists were students and graduates of Yeomyeong School, an

alternative school for former North Korean students. Thus, they once again

illuminated the issue of North Korean defectors, who are among us but whom

we hardly stop to think about.

On February 25, I visited Yeomyeong School at the foot of Mt. Nam (99 Sopa-

ro, Jung-gu, Seoul) to meet its vice principal, Cho Myung-sook. A small

building with two stories above ground and two basements, the school consists

of six classrooms and one teacher’s room. It looked rather like a make-shift

night school from the 1980s. The vice principal was having a late lunch with a

bowl of instant noodles and a rice ball. My first question for her was what led

her students to participate in the rally.

“News reaches my students a few times a year that some of their acquaintances

who had escaped the North were forcibly deported back, sending the

youngsters into a panic,” Cho said. “This time, it was even harder for them

because their peers were among those who were repatriated. Back in North

Korea, some of the children here witnessed people being shot to death in a

marketplace after failing to escape the country. These children know all too

well how cruelly everyone, young or old, gets beaten if caught attempting to

flee to the South. What is worse is that those defectors currently detained in

China were caught during the mourning period for Kim Jong-il while his son

Kim Jong-un had threatened that anyone caught defecting during that period

would be killed. My students know very well what will happen if they are sent

back to the North. That is why they couldn’t just sit and watch.”

Cho added, “When I was working in China helping to rescue North Korean

refugees, I saw, at close range, a man being taken away by a Chinese public

security officer. The terrified look on his face and his eyes filled with fear are

still vivid in my mind.” She went on to say, “After I decided to organize a

public demonstration, I was at a loss for what to do because I didn’t want my

students to be exposed. So, I discussed this matter with Mr. Cha In-pyo, who is

a sponsor for our school. Saying he was more than willing to help us, he

suggested that the students participate with their identity concealed. So they

could stand behind him, their faces covered with masks. I’m so grateful to

him.”

Yeomyeong School was established in 2004 by 23 church organizations and

individual patrons who were helping North Korean defectors. Among the eight

alternative schools for young North Korean defectors nationwide, this is the

only school that issues accredited middle- and high-school diplomas. The

school has produced over 70 graduates thus far and currently has 70 students,

aged 16 to 25.

“About 70-80 percent of our students have not completed formal education

fitting for their age,” Cho said. “Back in the North, most of these children had

given up their studies because they had to go around finding food and coal.

Those few who stayed at school scarcely had time to study either, because they

were too often mobilized for various construction projects, building dams and

paving roads, and activities for lending hands to farming villages. They often

had only one meal every other day, relieving hunger by eating from garbage

cans in the street or gathering roots in the mountains. Consequently, they are

suffering from anemia, muscular pains of unknown causes, various skin

diseases and many other health problems. Since they have never been

vaccinated, their immune systems are so weak. Their bodies adjusted to

extreme starvation for a long time, about 60 percent of these children develop

juvenile diabetes as they start all of a sudden to have three meals a day in the

South.”

What breaks Cho’s heart above all else is the trauma that has been entrenched

in the young minds. She explains, “Since they are having a hard time adjusting

to a radically different environment in the South after wandering from place to

place for a long time, it is already an enormous challenge for most of our

students to come to school on time every day. They suffer from anxiety and

nervousness, and tend to react with excessive sensitivity to the slightest

stimulus. Their parents can’t afford to pay much attention to their children’s

sufferings either, because they are heavily burdened with financial and other

problems themselves. Some students can’t come to school because they must

take care of their sick parents. Therefore, we find it much more urgent to heal

their bodies and minds, which have been mercilessly scarred from the very

moment of birth, by embracing them with love and patience rather than merely

passing them knowledge and sending them to college.”

One of the founders of the school, Cho is not only playing the role of a mother

for her students but is also responsible for school administration. I was curious

about what brought this woman who was born, raised and educated all the way

through college in Seoul to her current position.

Cho was born in 1970 in Sangye-dong, one of the poorest neighborhoods in

Seoul at the time. Her family was so poor that she could eat only one or two

meals a day. It was only after entering elementary school that she learned other

people eat three meals a day. With little interest in learning, Cho spent much of

her youthful days struggling to find a purpose in live. However, her mother

implored her to attend college to have a better life than her parents. After

failing the university entrance exam twice, Cho passed and majored in

education at Dankook University. Her goal was to become a teacher because

she wanted to look after children having a difficult adolescence as she did.

While a junior in college, however, an errant telephone call from an illegal

migrant worker changed her life. Finding that she spoke some English, the

stranger started to beg for help. The next day, Cho visited Guro Hospital,

where the person’s friend was hospitalized after suffering a worksite injury.

Cho said, “I am a type of person who can’t turn my back on people in need.

Moreover, as I was studying the Bible in earnest at that time, I thought it was

not right to ignore anyone asking for help.” “Up to that moment,” she

continued, “I had thought I was the most miserable person in the world. But I

found I was wrong when I came to learn about the situation of foreign migrant

workers. When I learned that some of them had no money for food, I visited

them daily for two weeks to buy them something to eat.” She was naturally

involved in helping migrant workers in negotiations on worksite accidents

with their employers, and eventually gave up her dream of becoming a teacher

to devote herself to social work. In 1997, she married a fellow social activist,

Lee Ho-taeg, who currently works to support foreign refugees in Korea.

During their honeymoon in China, the couple witnessed the appalling

situations of North Korean defectors. Cho notes, “It was a time when North

Koreans started to flee their country to escape from severe famine. Back then

my husband was working for ethnic Koreans from China who were injured in

worksite accidents or swindled by fraudulent job brokers. From some of the

Korean-Chinese workers, he heard about the wretched condition of North

Korean defectors hiding in China. So we started to meet them in person.”

Therefore, “just like independence fighters during the colonial period,” they

had secret meetings with North Korean defectors.

Cho recalled: “They were mostly people who had lived in the North Korean

provinces of Pyongan and Hamgyong, near the border with China, before

crossing the border to escape the severe famine in their country. With their

pale, terrified faces, they looked like ghosts, rather than living persons. Some

had come to look for food, but there were a lot of women who had been sold

for money.”

The honeymooning couple couldn’t return to Seoul, leaving these people

behind in such dire adversity, so they started to work for them, then and there.

Moving from one border district to another, where North Koreans sneaked into

Chinese territory, they provided food to some and helped detainees get their

release by raising necessary money from their relatives in the South. They

even built a hut near Mt. Paektu (Baekdu) on the border and lived there with

North Korean defectors for a few months.

Then, some defectors expressed their wishes to go to a third country, knowing

that they would die regardless of whether they were sent back home or stayed

in China. In October 1997, the couple decided to accompany 13 North Korean

defectors on their perilous journey to Vietnam. Cho said, “Our plan was that

my husband would help them cross the border from the Chinese side and I

would receive them on the Vietnamese side. But as soon as the 13 North

Koreans managed to cross the border, all of us including myself were arrested

by Vietnamese soldiers.”

Cho and the 13 North Koreans were taken to a Vietnamese military camp near

the border. She was so frightened that she thought about killing herself to

avoid being executed. Until they were released the next morning by paying a

few U.S. dollars – an unexpectedly petty sum of money – she spent the longest

night in her entire life of 28 years. After many hardships, the couple eventually

succeeded to take them to the Korean Embassy in Hanoi, but neither the

Korean Embassy nor the Vietnamese government was willing to protect the

defectors. After all, the 13 North Koreans were dispersed near the border area.

Cho and her husband went back to China and found them after searching for

them over six months; this time they safely brought them to South Korea.

“Completing the mission, I was completely exhausted and ill with tuberculosis

and hepatitis for the next two years,” Cho said. “Besides, my Christian faith

was also put to test. I challenged God, asking him why I had to perform such

difficult tasks. Watching the corpses of North Koreans shot to death while

crossing the border and floating around in the river, I cried, asking God where

he was.”

During those two years of convalescence, it occurred to her that what was truly

needed was a long-term, fundamental support system, rather than temporary,

individual assistance. At last, Cho decided to open a school. She noted, “South

Korean teachers are often helpless when our students go astray because the

teachers can’t figure out all the horrible experiences the children went through

at early ages. The children open their hearts to me relatively easily because I

almost died helping North Korean refugees and experienced terrible poverty

myself when I was young. By giving me trials, God has prepared me to take

care of these children.”

Asked about the present support system for North Korean defectors in South

Korea, Cho said, “It is important to offer basic cultural education about South

Korean society’s institutions, customs and values, rather than trying to teach

them occupational skills necessary for earning livelihoods immediately. It is

also necessary to provide curriculum according to age group. The current

programs for people of all age groups are less effective. It is no less important

to combine and integrate the various support programs provided by different

agencies.”

Regarding her view of national unification as an activist who is well versed in

the situations of both Koreas, Cho said: “As a college student, I could not

sympathize with my friends engaged in political activism. I thought it was

much more important to help one underprivileged person around me than to

preach grand political ideologies. When I helped foreign migrant workers,

people labeled me a ‘left-wing progressive.’ Then, since shifting to helping

North Korean defectors, I’ve been called a ‘right-wing conservative.’ What on

earth is ideology? Human lives should be placed ahead of ideology. Some

South Koreans today turn their faces away from the basic rights of North

Koreans who are leading indescribably miserable lives, decrying what they

call ‘pro-North Korean’ activism. We must not pass down such heartless fetters

of ideology to our posterity of coming generations.”

[February 27, 2012]

www.koreafocus.or.kr

Architectural Hallyu Attracts Young Architects from Abroad

Kim Mi-ri Staff Reporter The Chosun Ilbo

“Fascinated by Korea’s innovative and elegant design, I have studied

architecture for the past few years with an aim of working in Korea. I hope to

have an opportunity to learn more in your company··· Sincerely yours.”

Architect Roh Eun-joo, 43, head of Studio Gaon, recently received this e-mail

message from the United Kingdom. At first, the message written in Korean

made her think it was from a Korean, but the sender turned out to be a Briton.

Emilia Ross, 21, a student of architecture at the University of Edinburgh,

asked if she could get an internship at Studio Gaon, attaching her courteous

cover letter with an application form and her portfolio, all written in Korean.

She did not forget to add that her Korean proficiency is at introductory level.

The Seoul-based studio interviewed Ross by exchanging a few rounds of e-

mails in Korean, and decided to employ her as an intern. “We’ve had

employment inquiries from architects in Spain, Uruguay, Poland and other

countries, so the inquiry [from Ross] itself was not so extraordinary, but her

eagerness and effort to communicate in Korean aroused my curiosity about

her,” Roh said.

Lately, there has been a rising number of architects and students of architecture

who contact Korean architectural design firms in the hope of working in

Korea. In some renowned firms, receiving employment inquiries from abroad

is not rare anymore. At Iroje Architects & Planners, run by the architect Seung

Hyo-sang, 60, the staff has always included one or two foreign architects at

any given period for the last several years. Currently, there are two of them –

one from the United States, the other from China.

This tendency is also found in Archium, headed by Kim In-cheol, 65,

professor of Chung-Ang University. Recently, two foreign staffers – one from

the U.K. and the other from Thailand – completed their one-year stints and

returned home. Shortly afterward, an Irish architect came for an interview.

Gansam Architects & Partners, one of the large architectural design firms in

Korea, has hired up to 10 foreign applicants at a time.

Korean architects, recalling how difficult it was for Koreans to find a job at

prestigious architectural firms in other countries, say they are amazed at how

things have changed. They agree that hallyu, or the Korean Wave, has reached

architecture. Seung Hyo-sang of Iroje comments, “Architecture is a saturated

market in America and Europe. In Korea, on the other hand, various kinds of

dynamic, short-term projects that can’t be experienced in those regions are

frequently carried out.” He asserts that young architects still in their twenties

from abroad should find Korea to be the “best country for training.”

“Since the Lehman Brothers crisis in 2008, large-scale architectural projects

have virtually disappeared in the U.S.,” says Clayton Strange-Lee, 30, an

American architect working at Iroje. He adds, “I appreciate that I can work in

Korea, where a relatively higher number of new architectural projects are

going on.”

Professor Kim In-cheol ascribes the “architectural hallyu” to the development

of Internet media. He states that young foreign architects who learn about

outstanding Korean architects and their works through prestigious

international architectural websites feel at ease about contacting their Korean

offices. Lee Kwang-man, president of the Korean Institute of Architects, notes,

“As K-pop’s popularity has led to the heightened interest in Korean culture in

general, an increasing number of foreigners want to come to Korea to study

architecture as well as experience a new culture.”

[March 15, 2012]

www.koreafocus.or.kr

- Rethinking the Theories on North Korea’s Demise

- Koreans, It’s Time to Lead, Not Follow

Rethinking the Theories on North Korea’s Demise

Oh Gyeong-seob Research Fellow Sejong Institute

“Post Kim Jong-il”

By Kim Young-hwan, Zeitgeist, 236 pages, 10,000 won

The odds of North Korea remaining intact under the watch of Kim Jong-un

have come under intense international scrutiny following the death of former

leader Kim Jong-il.

A number of books on the untested new leader have been published in South

Korea, but people in the South seem uninformed. Furthermore, the books are

limited mostly to Kim Jong-un’s persona — his personality and childhood —

and the transition of power from his late father Kim Jong-il. They

consequently fail to weigh the chances of the new regime succeeding or shed

sufficient light on the future prospects of the North Korean regime.

Against this backdrop “Post Kim Jong-il” hit the shelves. By rekindling the

debate on the possibility of regime collapse in North Korea and triggering

debate on whether Kim Jong-un can prove his worth, the book strikes chords

that are decidedly different from the conventional contemporary literature on

North Korea.

Author Kim Young-hwan’s personal reputation is partly responsible for the

buzz that this book is generating. Kim was once dubbed the “godfather” of

South Korea’s pro-juche (North Korea’s governing ideology of “self-reliance”)

movement in the 1980s. He was the first person to preach the juche ideology

to South Korean left-wing activists and the founder of the “National

Democratic Revolutionary Party,” an underground pro-North organization.

That’s not all. Thanks to direct contact lines with the reclusive regime, Kim

was personally chaperoned by North Korean agents in submarines to twice

meet with North Korean founder Kim Il-sung, and he also participated in

debates on the juche ideology with North Korean scholars. Ironically, Kim said

his epiphany on the reality of North Korea hit during these visits; he realized

the regime was little more than an illegitimate totalitarian government.

Kim eventually disbanded his party and sought the help of his colleagues to

launch efforts to democratize North Korea. In many ways his book offers the

answers as to what made a former pro-Pyongyang activist like himself embark

on the path of democratizing North Korea.

This book is not a thesis of any kind to scientifically prove theories. Rather,

it’s a collection of essays that simply and effectively convey the author’s

thoughts and views on issues connected to North Korea’s collapse. The author

does not assume any specific theoretical perspective or approach. Instead, he is

focused on unleashing his thoughts without being constricted to a theoretical

mold. This makes the book an easy read and accessible to anyone who is

interested in North Korean affairs. It would be equally beneficial for experts

who would have access to the author’s refreshing views, opinions and

hypotheses on the collapse scenario and other related issues.

The main mission of the book is to verify the proposition that North Korea’s

collapse is near. To this end, the author presents largely provocative and

disputable views on a host of related questions. They include: “Is North Korea

a socialist regime?” “Will the Kim Jong-un regime be a success?” “Will North

Koreans fall into destitution if the regime collapses?” “Would North Korea’s

collapse spell devastation for Northeast Asia?” “Is an early reunification

necessary?” and “What are the chances of China annexing North Korea or

North Korea becoming China’s newest province?” Of these issues, this

critique will focus mostly on reviewing the author’s theories on North Korea’s

fall, along with the chances of a smooth succession by Kim Jong-un and the

characteristic traits of the North Korean regime.

In the chapters titled “North Korea’s Collapse is Near” and “Issues Related to

North Korea’s Collapse,” the author predicts an end to the North Korean

regime. North Korea experts feverishly debated this topic in the early to mid-

1990s. Proponents of the meltdown theory predicted that North Korea would

be affected by the fall of Eastern European socialist nations. They also

underestimated Kim Jong-il’s ability to cope with the challenges his regime

faced, such as the death of his father Kim Il-sung, severe famines and a broken

economy. They were thus unable to foresee the North Korean regime’s power

to stay afloat for two more decades after the first Kim’s death.

These scholars consequently adopted a more intrinsic approach. After

watching Pyongyang withstand a great famine and economic troubles, the

majority now sees durability in the regime. The author chides these scholars

for initially being unaware that by the time Kim Il-sung died in 1994, the

North Korean regime was already gravitating towards Kim Jong-il. This was a

sure indication that an immediate collapse was unlikely.

The 1995 food crisis pushed North Korea closer toward the edge, the author

writes. Since then, with most of its state control systems crippled, North Korea

has undergone ground-breaking changes from the bottom up. They include: 1)

the emergence of a military dictatorship, 2) the military attaining more power

and authority than the Workers’ Party, 3) a regime-wide ideological makeover,

4) the public’s waning loyalty to the party and ruling elite, 5) widespread

corruption, 6) slackening government control over the public’s economic

activities, and 7) more inflow of information from the outside world and its

countrywide proliferation. These new trends have rendered the regime

powerless to plug the holes in its system, according to the author.

He also argues that the chances are extremely low for North Korea to make a

soft landing by implementing Chinese-style economic reforms and market

openings, mainly because the Workers’ Party of Korea is unequipped to play a

pivotal role in such restructuring. Another reason he cites is the moral

deficiencies of Kim Jong-il and Kim Jong-un, which are manifested in the

form of economic decline, human rights violation, widespread corruption,

disorganized personal lives, embezzlement, and an extravagant lifestyle, all of

which makes it impossible for the North Korean leadership to open up the

country without triggering violent political protest from the populace.

The external environment also is unfavorable, the author writes. North Korea

cannot expect any assistance from communist ideologies or the global

communist movement, which has long since lost momentum, nor enlist

support from the international community that disapproves of its isolationist

policy. Having the wealthy capitalist South on its doorstep would also

exacerbate the political uncertainties entailing economic reforms. Even if the

North decides to pursue reform and openness, it would have a low chance of

succeeding as its political uncertainties would deepen to the point where the

regime would suffer a meltdown regardless of whether it continues reforms or

not.

The effort to champion North Korea’s collapse when the majority of North

Korea watchers are skeptical about the possibility should certainly be

accounted for as it can rekindle debate and stoke interest among scholars.

However, as the author himself admits, the symptoms do not guarantee an

implosion. A detailed identification of the fuse is therefore necessary to

persuade die-hard critics. That the North has been precariously hanging by a

thread for a long while — since as early as 1995 — or that its demise is

inevitable in the long term is not a strong enough argument.

Pinpointing the fuse, of course, is far from easy. For similar reasons, experts

have yet to offer a satisfactory explanation for the fall of socialistic economies.

Numerous hypotheses have emerged, but none are convincing. The theory on

failed coordination says that when the markets replaced the Soviet Union’s

centralized planning system, the state’s arbitration mechanism broke down and

eventually sparked a collapse. Another theory blames increasing unofficial

economic activities, such as household spending, embezzlement, corruption

and organized crime. The theory of the dictator being coerced into surrender

says the Soviet Union crashed when its authoritarian regime was forced to

slacken its surveillance capabilities due to increasing expenses and the market

producers realized the regime had been rendered incapable of imposing severe

punishments.

The bottom line is that the mechanism behind North Korea’s anticipated

collapse has not been sufficiently delineated in the book. The author claims a

collapse cannot be avoided under Kim Jong-un because, at most, the country

merely appears relatively stable in its power transition. In the chapter on

“Chances for Success of Kim Jong-un’s Power Inheritance,” the author writes

that while the new North Korean government may be able to avoid immediate

chaos, it will eventually be subject to a larger crisis due to Kim’s shaky

leadership and his regime’s overall vulnerability.

One of the biggest problems of the new government is that the transition was

rushed and thus has disturbed the existing order and hierarchy among the

ruling elite. This could lead to their defiance. Exacerbating the problem is Kim

Jong-un’s lack of political savvy, which means he has few confidantes to turn

to for sound advice and support. Kim is also expected to face challenges in

controlling the ruling elite, mostly because he has spent much of his life

outside the country and thus lacks understanding of his own people. Further,

other high-ranking party members or younger North Koreans may question the

propriety of sustaining an anachronistic hereditary dynasty in a nation calling

itself the Democratic People’s Republic, while conflict is in store between Kim

and his more ambitious subordinates.

The list of North Korea’s structural weaknesses goes on. The North Korean

flavor of communism has all but lost its legitimacy and the country’s national

competence is almost completely disintegrated, particularly in comparison

with South Korea. The North’s insistence on nuclear weapons development

and constant human rights violations have turned the regime into an

international outcast, while its starving population is losing respect for a

government relying on powers of coercion.

On the economic front, a series of policy miscues, including the botched 2009

currency reform, is inciting further complaints. The cadres as well as rank and

file members of the Workers’ Party show little passion or sense of duty for the

communist revolution, and are instead becoming extremely self-centered and

opportunistic. On the whole, the North Korean economy has lost its powers of

self-restoration and has become increasingly dependent on the masses and

markets. Corruption is widespread among bureaucrats and the administrative

system has been disabled.

The state surveillance and fear are the two remaining pillars of the North

Korean leadership. But the author points out that it won’t be easy to imitate the

Kim Jong-il government and even if it does succeed, oppressive policies tend

to groom more defiance than fear. The author presents these and other

arguments to explain North Korea’s troublesome fate. But while the Kim Jong-

un regime is obviously engulfed in various internal and external crisis factors,

the author does not explain precisely what will doom it. Such an explanation is

necessary to prove the end is near.

Gordon Tullock’s theories are something worthy of mentioning at this point.

According to Tullock, dictatorships are overthrown by high-ranking

government officials, military action by another country, or a public uprising.

Among them, public uprising rarely leads to the fall of autocracy. Most

revolutions start with elite bureaucrats.

Given the characteristics of the North Korean regime, a crisis would most

likely be triggered by a rift between Kim Jong-un and the ruling elite. Clashing

interests and undue allocation of authority within the coalition established

between Kim Jong-un and the ruling elite may be another cause for friction.

Chaos and struggle would inevitably surface if Kim fails to mediate between

interest groups and properly mete out authority. All these factors could work

against Kim Jong-un as he claws for power. The author should, however, have

supported his claims by explaining exactly how the Kim Jong-un regime will

come face-to-face with a crisis.

In the chapter, “North Korea is No Socialist Regime,” the author writes that

the North can no longer be categorized as a socialist state. In his eyes, North

Korea has degenerated into a dictatorship of the Kim clan. The ruling juche

ideology is nothing more than a means for idolizing the regime’s paramount

leader and justifying his monolithic rule.

Over the past 60-plus years, North Korea has transformed from a socialist

regime (from 1945 to the late 1960s) into a totalitarian socialist regime (from

the late 1960s to the early 1990s) and finally a mafia-style military dictatorship

(from the 1990s to the present). A communist single-party government, state

ownership and command economy — the three major factors constituting a

socialist state — started to crumble in the late 1960s to be completely

destroyed by the mid-1990s, according to the author.

Since the 1990s, the Workers’ Party has been reduced to a propaganda tool for

Kim Jong-il’s one-man dictatorship, while the Korean People’s Army has

become almost completely independent of the party to serve as Kim Jong-il’s

private army. North Korea may be keeping up appearances of state ownership

of goods but the state coffers were turned into the private pockets for Kim Il-

sung and Kim Jong-il as early as the 1970s. North Koreans were reduced to

workers at the plants and farms owned by Kim Jong-il in the 1990s. The

command economy was not functioning properly as vital government systems

were shut down due to food shortages and an economy pandering to the

military and monolithic dictatorship of Kim Jong-il.

Pundits, however, will not be easily convinced that North Korea is no longer a socialist regime. Park Hyeong-jung, for instance, claims that one-man dictatorship and personal cult are not uniquely North Korean but were

witnessed in other former socialist countries. He calls the phenomenon “under-developed socialism.” He also claims that what is referred to as “a uniquely North Korean phenomenon” occurs whenever efforts for socialist construction attempt to adjust to the external and internal conditions of an under-developed country such as North Korea. He calls the phenomenon “an inherent hereditary generality that has rationally materialized in the North Korean environment.” Another expert, Cho Han-beom, says the basic premise of studies on North Korea is that the reclusive country, despite its distinct characteristics, is indeed a socialist regime retaining all the basic traits of socialism, such as the elimination of private ownership, a command economy, and monolithic rule by the single party and government. He said that in order to fully understand the demise of socialism, the process must be divided into the disintegration phase, when socialism starts to crumble, and the transition phase marking an official shift to a market economy, to be separately analyzed. If he seeks to overturn the existing hypotheses, the author should have highlighted how the basic elements of socialism such as the communist party rule, state ownership and a command economy, are either non-existent or insignificant in the North. He could have also offered a detailed analysis on the workings of the North Korean economy and related data, rather than simply say state ownership and command economy went to Kim Jong-il’s private coffers. The author put forward sufficiently provocative claims but failed to provide the theoretical evidence needed to back them up. Nevertheless, “Post Kim Jong-il” is a significant piece of work in that it has aroused the need for further studies on the theories of North Korea’s demise. The hypotheses presented by the author pose sufficient academic challenges to other North Korea experts. The arguments are carried out in an easy yet convincing manner, while dealing with a heavy subject. For these reasons, this book is recommended to all who are interested in North Korean affairs.

[Quarterly Zeitgeist (Sidae Jeongsin), Spring 2012, published by the Sidae Jeongsin Co.] www.koreafocus.or.kr

Koreans, It’s Time to Lead, Not Follow

Kim Beom-su Staff Reporter The Hankook Ilbo

“First Mover”

By Peter Underwood, Golden Lion, 280 pages, 14,000 won

“A decade ago, who would have imagined Samsung outrivaling Sony? But

Sony is no longer a match for Samsung and it’s now strictly between Samsung

and Apple.”

Accurate as it may be, the observation is hardly new. However, it holds the key

for unlocking Korea’s potential because it comes from none other than Peter

Underwood, a 57-year-old corporate consultant who’s been in the business for

over two decades in Korea.

In this part of the world, Peter Underwood is better known as Won Han-sok,

the great-grandson of Horace G. Underwood who founded what is now Yonsei

University. He is the fourth-generation descendent of the Underwood family

who became permanent residents in Korea after arriving in the 19th century.

Despite their undeniably significant contribution to Korean society, the

Underwood clan has experienced their share of bad press, such as when the

author’s older brother Han-kwang (Horace H. Underwood), then a professor at

Yonsei University, departed from Korea some years ago. The local media was

abuzz with speculation of the Underwoods abandoning a century-old

friendship when in reality, Peter stayed behind. Many times, he was asked to

verify that he was a true Underwood. “First Mover” is, in some ways, an

answer to these and other questions he has received over the years.

The book’s title is a clear reference to the strategy conceived by Samsung

Electronics Chairman Lee Kun-hee. It also takes a page from the advice

imparted to Korean youths by local IT guru and entrepreneur Ahn Cheol-soo.

Underwood’s own message to Koreans is to find their own blue oceans so they

can stop being followers and become leaders in both life and the global

markets.

The author is probably one of the best suited to pen such a book. His definition

of himself is “a Westerner whose roots are in Korea,” an apt description as he

spent his adolescence in Korea, having arrived as a newborn. Except to attend

university and graduate school in the United States and work in Japan for

about four years, Underwood has never left Korea. Thus, his mind may be that

of a Western man but he is knowledgeable enough about Korea to earn a seat

on the Presidential Council on Nation Branding.

Considering that his line of work has involved mainly advising foreign

investors on the Korean business environment, Underwood must have itched

to talk about what he witnessed over the years. But he has suppressed the urge

— until now. This volume will be the author’s first attempt to bare his feelings

about Korea and Koreans, both the good and bad.

As the title speaks for itself, the author’s main mission is to send out the

message that there is real reason for alarm should Korea remain content to be

branded a “fast follower.” Being an avid follower sufficed to achieve the

“Miracle of the Han River,” but the guarantee for the future is not there

anymore.

The author says Korea will eventually face competition from advanced

countries such as the United States, Japan and Europe in the race to develop

the next, ground-breaking “it” item. Does this fill you with pride? It should

actually be cause for alarm because it’s a large order to fill for a nation who

has succeeded by being a diligent follower alone. Korea now has to break out

of the box and create a masterpiece to wow the masses. A failure means no

future at all. Underwood, who refers to Korea “our nation” and Koreans as

“us” throughout the book, firmly believes the country is capable of changing

its persona.

There are certain problems to be addressed, however, to ensure success; the

culture and mindset of the “fast follower” must be replaced. One of the best

ways is to reform the Korean education system, Underwood says. He admires

Korea’s passion for education, but he writes that the system is riddled with

holes and shortfalls.

Forcing students to toil away for the same answers and be judged with points

and scores alone must be discouraged at all costs, he says. Instead, they should

be encouraged to freely explore creative solutions to be groomed to one day

generate powerful and creative new ideas.

The predominant authoritarian culture based on blind obedience is also high on the author’s “out” list. Recklessly charging towards unverified goals — traits inherited from past military dictatorships — will get us nowhere, he says. The search for a new future, one that is yet void of any right or wrong answers, requires a collective social intellect that can be attained through honest debate and trials and errors. On the business front, Underwood notes the struggle to breed strong managers in a community where enterprises are ruled by a few chaebol (conglomerates) tycoons. He calls on corporate Korea to return to shareholder democracy. Koreans also must distance themselves from their “one-family” social culture that has yielded damaging side effects such as xenophobia and repulsion toward interracial families. The author opines on these and other critical societal and economic matters in vivid detail through his own personal anecdotes. Regarding the widespread view from futurists that China, Japan and India will eventually be recognized as future regional partners for the United States, Underwood strongly disagrees. “Japan has long since ceased to open itself up to the world and has consequently lost elasticity. The Japanese are therefore not qualified to become a first mover. When factoring out their obvious edge in size, China and India both lack essential qualities, such as democratization and social unity.” Korea, in contrast, is brimming with potential, Underwood writes. This is not to be mistaken that Korea will one day match the United States in military prowess or economic power. What we can do is become “a hub for creativity, innovation and fairness,” a place where people from all corners of the world can come to work and socialize to give Korea the recognition as a global epicenter housing these virtues. To achieve this glory, the author says, Koreans all over must unite to accept the challenge of change or expect a quick demise.

[March 17, 2012] www.koreafocus.or.kr

- Stephen Linton: “I have inherited the gene of 100-year-long love toward Korean people.”

Stephen Linton: “I have inherited the gene of 100-year-long love toward Korean people.”

Jeong Gu-hyeon Staff Reporter, Korea Daily (JoongAng Ilbo Los Angeles)

Dr. Stephen Linton can’t remember the lyrics of a single American pop song

but he can recite the names of more than 500 tuberculosis patients of his, all

living in North Korea. He is concerned that the 11-year-old girl named Su-

jeong in South Pyongan Province should not forget to take her medicine on

time.

Also known as In Se-ban, Linton probably has inherited the loving gene for

Korean people from his great-grandfather, Reverend Eugene Bell, who arrived

in Korea in 1895 as a Southern Presbyterian missionary. Since then the four

generations of Linton’s families have lived in Korea, providing medical help

and conducting missionary work and educational service to the poor and the

needy mainly in their southern home province.

To provide medical assistance to North Koreans, the Eugene Bell Foundation

was established in 1995, commemorating the 100th anniversary of Reverend

Bell’s arrival in Korea. Since its inception, the foundation has treated some

250,000 North Korean tuberculosis patients at a total cost of US$35 million so

far.

The 62-year-old chairman of the Eugene Bell foundation is one of the very few

Americans welcomed by North Korean authorities. Some newspapers in Seoul

have referred to Linton as “the American most trusted by the North.” Linton

paid a visit to the JoongAng Ilbo office in Los Angeles in an effort to ask

Korean Americans to give support to North Korean patients suffering

tuberculosis. This interview was conducted in Korean as Linton speaks it

fluently.

Q. You visited North Korea a few months ago. Could you tell us about

your patients there?

A. I visited North Korea last October. During the last four years, the Eugene

Bell Foundation has been focusing on providing treatment for multidrug-

resistant tuberculosis. So far, over 100 people have recovered from the disease,

and currently more than 500 patients are receiving quarantine treatments at six

different clinics in North Korea. Fortunately, the medication system is

stabilizing after years of operation.

Q. I understand that the type of tuberculosis that you are treating is

difficult to be cured.

A. Multidrug-resistant tuberculosis is resistant to at least two of the best anti-

tuberculosis drugs. Therefore, specially tailored treatments are needed for

individual patients, which cost 150 times more than a typical tuberculosis

treatment. Since it is very resource-demanding, even the United Nations had to

let go of this illness from its priority list. Without external humanitarian help,

the provision of proper medications is impossible in the North. More than

4,000 people are thought to be suffering from the multidrug-resistant

tuberculosis but only 5 percent of them receive any medical help.

Q. What is the necessary medical procedure required for treatment?

A. A patient should be put into quarantine for at least 18 months, having

regular medical intakes. This is absolutely critical for successful treatment.

However, the whole procedure is very painful for patients. They should take

more than a handful of drugs at a time, consisting of 16 tablets, twice a day.

More often than not, side-effects tend to appear such as dizziness, nausea and

moodiness. Quite a few of patients give up the treatment halfway through

because of the painful procedure and long quarantine.

Q. You have often said that medical assistance for tuberculosis patients is

one of the most effective ways to help the North Korean people.

A. Medical aid can be offered in a very transparent way, especially for

multidrug-resistant tuberculosis. Rice provision may be regarded as

controversial because, as some people worry, the food supply can end up with

the military. Tuberculosis medication, in comparison, is tailored for each

individual patient. It ensures that the medicine reaches the intended patient

receiving that particular treatment. The medicines are delivered every six

months, with the patient’s and the donor’s names marked on the box. It is a

one-to-one donation system, where a donor knows who gets his or her

assistance.

Q. Could you elaborate on the financial side of the treatment? How much

does it cost to support medication for a patient?

A. Medical provision per patient requires US$2,000 per year in donation. That

means financial assistance of roughly US$200 a month could give a new life

to one patient suffering from the curable disease. If a church would take the

responsibility for the treatment of one patient, it would be the most effective

way to provide medicine in a predictable manner. I am very grateful that the

Council of Korean Churches in Southern California has expressed willingness

to find possible ways to provide medical support. I really hope to discover

more ways to increase help to the patients in the North.

Q. What do you feel about the medical situation there?

A. Whenever I visit North Korea, it breaks my heart. After returning from each

trip, my heart aches even more as I wonder how many of the patients that I

met will stay alive until my next visit. Sometimes when I find myself unable to

deliver the medicines they need, I feel frustrated with myself.

Q. When are the most rewarding moments for your hard efforts?

A. When the patients are fully recovered to leave the clinic in good health, we

call the event a “graduation.” Since the treatment involves a years-long

quarantine in separation from their families, leaving the hospital with restored

health often makes the celebration very emotionally charged. Last spring, we

celebrated the graduation of a woman patient, who was leaving after three-

year-long hospitalization. She cried, saying that she could finally hold her son

in her arms again. We all cried with her.

Q. Your schedule book should be packed with various commitments.

Aren’t you physically exhausted?

Contacting tuberculosis patients also should involve some health risks.

A. There is no preventive medicine to tuberculosis. Face-to-face meetings with

patients involve some risks of infection. But I am more motivated to approach

them and give treatment to them than feeling worried about my health.

Q. What do you think are the reasons for your close connection with the

two Koreas?

A. South Korea is my destiny as I was born to a missionary family and was

raised there. With regard to my work for North Korea, it has been inevitable

according to God’s providence.

Q. What is your favourite song?

A. I am quite old-fashioned and boring. The only song that I know by heart is

“My old hometown where I lived···” [This is the first line from the popular

Korean children’s song “Spring in My Hometown.”] I do not know all the

lyrics of any American pop song. Probably I am still living in the 19th century.

When I was only three years old, my parents moved to Suncheon in South

Jeolla Province and I grew up there. Back then, Suncheon was a small country

town and nobody had TVs or radios. Before I started to live in Seoul as a

freshman at Yonsei University, I was no more than a southern village boy.

Q. What is the vision of your work?

A. I hope to help consolidate an inter-Korean channel of exchange which is

sustainable enough to stand ideological tensions and political disputes.

Without solid foundation work, efforts for mutual understanding and

humanitarianism remain vulnerable to political and ideological influence. I

hope the Eugene Bell Foundation will play the role of a cross-border “delivery

service” to bring love to North Korean people. I pray that some day the

delivery role would be no longer necessary for the Korean peninsula.

Q. When do you think the two Koreas will be reunified?

A. Some South Korean people tend to think that the reunification will happen

all at once in a manner similar to a ribbon-cutting ceremony. I don’t think that

it will be a one-off event like that. Reunification isn’t something that can be

simply “switched on” at one single shot. Reunification should arrive in the

form of accumulated efforts that gradually increase inter-Korean exchanges on

various scales.

His Korean family name “In” is written in the Chinese character 印 meaning a

seal or stamp. A Korean dictionary provides 17 definitions. Notably, the

seventh definition is “an ineffaceable, deeply engraved trace.” Probably it was

not merely a coincidence that this particular definition is a typical usage in

North Korean regions.

[March 1, 2012]

www.koreafocus.or.kr

COPYRIGHT

Korea Focus is a monthly webzine (www.koreafocus.or.kr), featuring commentaries and essays on Korean politics, economy, society and culture, as well as relevant international issues. The articles are selected from leading Korean newspapers, magazines, journals and academic papers from prestigious forums. The content is the property of the Korea Foundation and is protected by copyright and other intellectual property laws. If it is needed to reprint an article(s) from Korea Focus, please forward your request for reprint permission by fax or via e-mail. Address: The Korea Foundation Seocho P.O. Box 227, Diplomatic Center Building, 2558 Nambusunhwanno, Seocho-gu, Seoul, 137-863, Korea Tel: (82-2) 2151-6526 Fax: (82-2) 2151-6592 E-mail: [email protected] ISBN 978-89-86090-85-7

Publisher Kim Woo-sang Editor Lee Kyong-hee Editorial Board

Kang Byeong-tae Chief Editorial Writer, The Hankook Ilbo Kim Hak-soon Senior Writer & Columnist, The Kyunghyang Daily News Kim Yong-jin Professor, Ajou University Yun Chang-hyun Professor, University of Seoul Hahm In-hee Professor, Ewha Womans University Kim Ho-ki Professor, Yonsei University Choi Sung-ja Member, Cultural Heritage Committee Hong Chan-sik Chief Editorial Writer, The Dong-a Ilbo Robert Fouser Professor, Seoul National University Peter Beck Korea Represetative, Asia Foundation

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