Korea, Republic of

▪ 2009

Area:

99,678 sq km (38,486 sq mi)

Population

(2008 est.): 50,187,000

Capital:

Seoul

Head of state and government:

Presidents Roh Moo-hyun and, from February 25, Lee Myung-bak, assisted by Prime Ministers Han Duck-soo and, from February 29, Han Seung-soo

      South Korea, a country heavily dependent on foreign trade and investment, was hit hard by the global economic downturn in 2008. (See Special Report (Financial Crisis of 2008 ).) To make matters worse, paralyzing demonstrations during the spring gave way to political deadlock in the fall. The only bright spot for the country was its better-than-expected showing at the Olympic Games in Beijing. (See Special Report (Games of the XXIX Olympiad ).)

      Despite having strengthened its economy in the wake of the 1997 Asian financial crisis, South Korea still found itself in the vortex of the 2008 global financial storm. Once again, foreign investors panicked and headed for the exits. The stock market plummeted nearly 40% for the year, while at one point the local currency lost half of its value against the U.S. dollar. Korea also experienced a trade deficit for the first time since 1997. Amazingly, the unemployment rate remained low (3.3% in November), and economic growth was positive for the year, but Pres. Lee Myung-bak warned that the economy could shrink in 2009.

      Fortunately, the crisis did lead to something that two successive nuclear standoffs with North Korea had failed to accomplish, the first-ever summit between South Korea, China, and Japan, which took place on December 13. China and Japan agreed to provide South Korea with a badly needed foreign-currency swap, and the three countries agreed to make their gathering an annual occurrence.

      President Lee took office in February but within weeks was facing his first political crisis as demonstrators took to the streets to protest his sudden decision to reopen the Korean market to American beef, prompting concerns about the potential importation of beef infected with bovine spongiform encephalopathy, or “mad cow” disease. The public's health concerns proved to be unfounded, and the popularity of U.S. beef bounced back, but the political damage had been done: President Lee's approval rating remained low for the rest of the year. Although Lee's Grand National Party won nearly two-thirds of the seats in National Assembly elections held in April, the party failed to pass any major legislation during the fall session, and the year closed out with a series of partisan brawls in the Assembly.

      Relations with North Korea deteriorated dramatically in 2008 in the wake of the election of a more conservative president in Seoul (see North Korea), but ties with the United States experienced an upswing. In March Lee was invited by U.S. Pres. George W. Bush to stay at Camp David, and he became the first South Korean president to do so. The withdrawal of Korean troops from Iraq appeared to cause little friction. At the height of the Iraq war, South Korea had been second only to the United Kingdom in terms of the number of non-U.S. troops serving in Iraq.

      In the culture and sports realms, there was a mix of tragedy and triumph. One of Korea's most beloved actresses, Choi Jin-sil, committed suicide at the age of 39 in October. The award-winning star of nearly 40 movies and television dramas, Choi had gone through a bitter public divorce and had battled depression for several years. Choi's death was a painful reminder that South Korea had one of the highest suicide rates in the world. Earlier in the year, an arsonist destroyed a top national treasure, the 600-year-old Great South Gate (Namdaemun). Authorities vowed to rebuild it. On a brighter note, at the Olympics South Korea won a record number of gold medals (13) and placed seventh overall in the medal count, exceeding all expectations.

Peter M. Beck

▪ 2008

Area:

99,678 sq km (38,486 sq mi)

Population

(2007 est.): 48,456,000

Capital:

Seoul

Head of state and government:

President Roh Moo Hyun, assisted by Prime Ministers Han Myung Sook, Kwon O Kyu (acting) from March 7, and, from April 2, Han Duck Soo

 South Korea was anything but the “Land of the Morning Calm” in 2007 as voters went to the polls in December to elect their first CEO president, 66-year-old Lee Myung-bak. (Lee Myung-bak ) Despite Lee's uninspiring policy platform and questions concerning his involvement in a financial scandal, Koreans showed a preference for pragmatism over populism by overwhelmingly voting for the former Hyundai executive and mayor of Seoul. Unlike past elections, this one was not driven by anxieties over North Korea but instead focused on economic issues such as creating jobs and making home prices more affordable. Lee fell just short of securing an absolute majority but defeated his nearest rival, Chung Dong-young, by a resounding margin of more than 22%—a first in South Korea's usually razor-close elections. Lee had faced a much more bruising battle to win his party's nomination in August, when he narrowly defeated the daughter of former dictator Park Chung Hee.

      Just as the presidential election was kicking into high gear, Pres. Roh Moo Hyun traveled to Pyongyang in early October to meet with his Northern counterpart, Chairman Kim Jong Il, a full seven years after the first North-South summit. Aside from a vague pledge to replace the armistice agreement with a peace treaty to formally bring the Korean War (1950–53) to an end, the summit did little to reduce military tensions, but the North was still able to secure billions of dollars in economic assistance. The summit underscored the fact that North-South economic cooperation had skyrocketed in recent years. In the Kaesong Industrial Complex in North Korea, just across the demilitarized zone, more than 20,000 North Koreans were working for South Korean companies. In August the North-South railway line was reconnected for the first time since the division of the Korean peninsula in 1945.

      South Korea's zeal for sending Christian missionaries abroad received unwelcome attention in July when a group of 23 missionaries was kidnapped in Afghanistan. Over the course of 43 days, two missionaries, including the group's leader, were executed, but the rest were released after the South Korean government pledged to withdraw its 200 troops from Afghanistan by the end of 2007 and reportedly paid $20 million in ransom to the Taliban kidnappers. Despite their ordeal, the kidnapping victims became the object of public scorn for having ignored government warnings about travel to Afghanistan.

      South Korea experienced its worst-ever oil spill in December when a Samsung Heavy Industries barge collided with a Hong Kong oil tanker off the west coast. Some 66,000 bbl of crude oil gushed into the ocean, fouling a 48-km (30-mi) stretch of coast and damaging an estimated 14,000 ha (34,600 ac) of fisheries and marine habitat. The spill was the worst the world had seen in more than four years. The cleanup would likely take years and cost up to $1 billion.

Peter M. Beck

▪ 2007

Area:

99,646 sq km (38,474 sq mi)

Population

(2006 est.): 47,983,000

Capital:

Seoul

Head of state and government:

President Roh Moo Hyun, assisted by Prime Ministers Lee Hai Chan, Han Duck Soo (acting) from March 14, and, from April 19, Han Myung Sook

      South Korea lived up to its reputation in 2006 as one of the most dynamic countries in the world, but it faced a growing degree of political, economic, and diplomatic uncertainty, given North Korea's nuclear test in October (see Korea, Democratic People's Republic of , above), presidential elections slated for December 2007, and growing anxieties about the economy.

      All eyes were on the candidates for the upcoming presidential election. Given an approval rating in the single digits (and falling) and his political party in revolt, Pres. Roh Moo Hyun might have been a lame duck, but he offered a series of unvarnished criticisms of institutions (such as the Korean military) and individuals around him, including presidential hopefuls from his own party. The leading presidential candidate was former Seoul mayor Lee Myung Bak. His closest competitor was Park Kun Hye, the daughter of former president Park Chung Hee. Park bounced back quickly from a knife attack in May at a campaign rally for local elections, which her party swept, but questions lingered about her overall leadership abilities. Another former Seoul mayor, Goh Kun, was running third in most polls, but he was lacking in charisma and was without a political party to support his campaign. Though a conservative, he was seen by many liberals as their only hope for clinging to power, given that the leading liberal candidates were collectively less popular than President Roh.

      Despite solid economic growth of 5% and an unemployment rate of 4%, an economic malaise settled over South Korea, led by fears of an overheated housing market (prices in some areas of Seoul rose by 20%) and frustrations with an education system that led a growing number of the more affluent to educate their children abroad. Nevertheless, South Koreans' overall pessimism was difficult to fathom, especially since exports broke the $300 billion mark in 2006, which represented a doubling of exports in five years and placed South Korea 11th in the world among exporting countries.

 On the diplomatic front, all of South Korea's key bilateral relationships deteriorated. North-South relations almost collapsed after North Korea's missile launch in July. Relations with the U.S. continued the plunge that had begun in 2001 when Pres. George W. Bush took office. The chief sources of friction were divergent policies toward North Korea and differences over the future role that the U.S. would play in defending South Korea. Relations were already bad with Japan, but a territorial dispute over two rocks (Tokdo/Takeshima) in the sea between them nearly turned into a military clash in the spring. President Roh met with his Japanese counterpart on October 9, the day the North conducted its military test, but this did not stop Roh from raising the history issue. After their summit the two leaders held separate press conferences on opposite ends of Seoul. Relations with China also deteriorated, with disputes over history (whether an early kingdom was Korean or Chinese) and a reef that could be seen only at low tide.

      These diplomatic setbacks made the selection of Foreign Minister Ban Ki-moon (see Biographies) as the new UN secretary-general all the more surprising. South Korea also saw its first female prime minister assume office in April. Though the post was largely ceremonial, this appointment represented a significant step for a traditionally male-dominant society. A report by the World Economic Forum showed, however, that in terms of gender equality, South Korea placed 92nd of 110 countries; it occupied the last position in sex ratio at birth, came in 99th in the ratio of female parliamentarians, and took the 95th spot in wage equality.

Peter M. Beck

▪ 2006

Area:

99,601 sq km (38,456 sq mi)

Population

(2005 est.): 48,294,000

Capital:

Seoul

Head of state and government:

President Roh Moo Hyun, assisted by Prime Minister Lee Hai Chan

      The split between South Korea and its longtime ally the United States over policy toward North Korea marked many of the events of 2005. Since the outbreak of the Korean War in 1950, the U.S. and South Korea had maintained a close military alliance vis-à-vis their common enemy, North Korea, and though both countries agreed on the objective—defense against possible hostilities from North Korea and eventual reunification—they began to diverge from concordance on the method of achieving that objective.

      South Korea had moved farther to the left in such matters as the election in 2002 of a new president and in its attitude toward North Korea, whereas the U.S. had moved farther to the right under the policies of Pres. George W. Bush. In 2005 South Korea continued to pursue a policy of engagement with North Korea, aimed at increased levels of trade, economic assistance, and visitor exchanges, while the U.S. continued its confrontational rhetoric regarding North Korea's cessation of nuclear-weapons production.

      South Korea increased trade with both the U.S. and North Korea and moved up one notch to become the U.S.'s seventh largest trading partner. In addition, Seoul replaced Beijing as the single-largest trading partner with North Korea.

      South Korean– Japanese relations deteriorated on two fronts. The first was an argument over the ownership of an island group that South Korea called Tokdo and that Japan referred to as Takeshima (some maps used a neutral term—the Liancourt Rocks). The issue came to the fore when the Shimane Prefectural Assembly—not the Japanese government—declared that February 22 was Takeshima Day. The South Korean government immediately lodged protests with the Japanese government, which said that it could not become involved in local matters. The second issue, which had boiled to the surface in the past, involved the issuance of Japanese history books that South Korea and China charged had toned down the atrocities committed by Japanese soldiers during World War II. A solution was reached, however, when South Korea, China, and Japan formed a committee to write a history acceptable to all parties.

      Pres. Roh Moo Hyun made four overseas trips that were a boost to his sagging approval ratings at home. He visited seven countries: Costa Rica, Germany, Mexico, Russia, Turkey, Uzbekistan, and the U.S. twice, including one stop in New York City to address the United Nations. In addition, Roh played host in June to Japanese Prime Minister Junichiro Koizumi. The crowning event of the year, however, was South Korea's hosting in November of the 13th Asia-Pacific Economic Cooperation (APEC) meeting, where leaders of 21 countries in the Pacific region attended meetings in Pusan.

      On the domestic front, a controversial redevelopment project that included the removal of the overhead Cheonggye Highway—which was built during the 1970s and covered a hopelessly polluted stream and blighted area but provided a rapid exit from downtown Seoul to the east side of town and eastern suburbs—turned into an unmitigated success. Though Mayor Lee Myung Bak's plan to tear down the crumbling highway and restore the stream was initially met with skepticism, concerns about greater traffic congestion were swept away after the stream was restored and beautifully landscaped along its banks with bridges, stepping stones, walkways, and jogging/biking paths. These areas became a tourist attraction and an example of an urban-beautification success story.

Mark Peterson

▪ 2005

Area:

99,900 sq km (38,572 sq mi)

Population

(2004 est.): 48,199,000

Capital:

Seoul

Head of state and government:

President Roh Moo Hyun (except Goh Kun [acting] from March 12 to May 14), assisted by Prime Ministers Goh Kun, Lee Hun Jai from May 25, and, from June 30, Lee Hai Chan

      South Korea's newly elected Pres. Roh Moo Hyun was at the centre of controversy as 2004 began, but by the second half of the year, he was in a stronger position than ever before. In January Foreign Minister Yoon Young Kwan was forced to resign for taking a pro- American stance in regard to North Korea and criticizing the Roh administration's position, which was one of cautious engagement; the United States had taken a hard line, especially in regard to nuclear weapons.

      Roh had been elected by a majority of younger voters who viewed South Korea's traditionally strong ties with the U.S. as an impediment to working out diplomatic initiatives with North Korea. For the first time, opinion polls indicated that more people feared that war would be caused by the U.S. than by North Korea. In a speech on the holiday commemorating the March First Movement, Korea's 1919 protests against Japanese colonial rule, Roh reiterated his call for a foreign policy independent of the U.S. and said that South Korea should strengthen its independence step by step.

      The conservative political party, the Grand National Party (GNP), and the moderate elements of the Millennium Democratic Party (MDP)—the party Roh had belonged to but from which he split to join the Uri Party—joined in the parliament to pass a bill of impeachment against Roh on March 12. The vote was 11 votes greater than the required two-thirds, with most of Roh's supporters boycotting the vote. Under the terms of the constitution, the president stepped down while the Constitutional Court heard the case. While the Constitutional Court was deliberating—it was required to make a decision within six months, and it stated that a decision would be made as quickly as possible— elections for the parliament were scheduled.

      The results of the April 15 election for the National Assembly were a stunning show of support for Roh. His party, only six months old, took 152 seats in the new 299-seat parliament. The other parties suffered a great defeat. The GNP lost 16 seats, which left it with 121 seats, and the MDP lost 53 seats, which left it with only 9 seats. A new party, the Democratic Labour Party, appeared on the scene with 10 seats. Just prior to the election, the GNP had named a new party leader, Park Kun Hye, the daughter of Gen. Park Chung Hee, who had been credited with the economic development of South Korea while serving as the country's president from 1961 to 1979.

      On May 14 the Constitutional Court ruling on Roh's impeachment was handed down; Roh was found not guilty of the charges made, and he was reinstated as president. The reinstatement and the new majority in the parliament gave Roh the mandate to move forward with his agenda for new leadership in South Korea.

      Roh's independent foreign policy did not interfere with a U.S. request that South Korea send additional troops to Iraq; a force of 3,000 was dispatched to help with the rebuilding of Iraq. A terrorist group kidnapped a South Korean translator, and he was beheaded after a videotape was released showing him pleading for his life. The experience was traumatic for the South Korean public and led to protests against the then impending dispatch of South Korean troops to Iraq.

      South Korea opened its high-speed rail line from Seoul to Pusan. The trains, capable of travel of up to 322 km/hr (about 200 mph), were expected to shrink the travel time to provincial cities by half and make rail travel competitive with domestic air travel.

Mark Peterson

▪ 2004

Area:

99,538 sq km (38,432 sq mi)

Population

(2003 est.): 47,925,000

Capital:

Seoul

Head of state and government:

Presidents Kim Dae Jung and, from February 25, Roh Moo Hyun, assisted by Prime Minister Kim Suk Soo and, from February 26, Goh Kun

      On Feb. 25, 2003, South Korea began a new political era with the inauguration of a new president, Roh Moo Hyun. Roh had been an opposition leader during the time of the military governments in the past and had established a reputation as a defender of unpopular and leftist demonstrators. His campaign attracted young people and many who were openly anti-American. For the first time since South Korea developed a truly democratic system in the late 1980s, a political newcomer was elected president. Roh succeeded Kim Dae Jung, who had been an advocate of democracy in his country and who had succeeded Kim Young Sam, another opposition leader, who was elected president when he joined the party set up by the last military government. The two Kims had been active in politics since the 1960s, so Roh's election therefore represented a transition of leadership from an older generation. The new breed of politician was supported by a younger electorate—a generation that had not known the Korean War, the poverty and social strains of rebuilding after the war, or the great economic boom that had made South Korea a strong country. Roh's election symbolized South Korea's coming of age as a modern developed country.

      The new administration enjoyed only a brief celebration before the problems of a divided country began to weigh down on it. Soon after his inauguration Roh visited Washington, D.C., in what should have been a joyful celebration and a chance to coordinate efforts on many fronts with South Korea's closest ally. The meeting was not harmonious, however, and unfavourable press reports led to even greater disappointment when Roh returned home. Whereas Roh had campaigned on a promise of engagement with North Korea, in continuation of the policy established by his predecessor and party-mate Kim, the White House was embarking on a policy of confrontation with Pyongyang. North Korea's announcement that it was moving forward with the development of nuclear weapons had greatly disturbed the U.S. administration, which took the position that it would not reward bad behaviour. The South Korean media, meanwhile, took pains to remind Roh that he had pledged not to visit the United States, and the president's level of popular support began to erode. The situation reached such a pass that by October Roh had offered to hold a referendum on his policies and to step down if the public voted against him. The referendum was not held, however, and Roh's approval ratings began to rise somewhat as the year came to a close.

      Roh's policies toward North Korea were largely tailored to fit Washington's concerns about Pyongyang's development of nuclear weapons. On other issues, however, South Korea was able to interact with North Korea, and gradually progress was made in joint economic ventures, exchanges of letters, and reunions of separated families.

      On the economic front there was good news in 2003. The economy continued its growth and recovery from the crash of 1997. At midyear median personal income regained the $10,000 level that it had reached just before the crash, and industrial output and exports continued to grow. As an example, led by the Hyundai shipyard, South Korea took over the position as the number one shipbuilding country in the world. It was a world leader in personal electronics as well; the country moved into the top five in both cell-phone usage per capita and availability of Internet access. Extremely fast broadband connections were available to a higher percentage of people in South Korea than in any other country in the world.

Mark Peterson

▪ 2003

Area:

99,461 sq km (38,402 sq mi)

Population

(2002 est.): 47,640,000

Capital:

Seoul

Head of state and government:

President Kim Dae Jung

      As South Korea prepared for a presidential election on Dec. 19, 2002, three candidates emerged. The president Kim Dae Jung, was limited by the constitution to a single five-year term so could not run for reelection. Kim threw his support behind Roh Moo Hyun (see Biographies (Roh Moo Hyun )), a lawyer and former maritime affairs and fisheries minister. The lead opposition candidate was Lee Hoi Chang, who had run against Pres. Kim Dae Jung in 1997. In the event Roh, of the ruling Millennium Democratic Party, narrowly defeated Lee, with 49% of the vote to Lee's 46.5%. Roh would take office in February 2003.

      Aside from the election, the biggest stories in South Korea for 2002 were in sports. In June the country cohosted, with Japan, the World Cup association football championships, and in September and October it played host to the Asian Games. The World Cup was a remarkable, even historic event, and the Asian Games, held in Pusan, were a huge success. For the World Cup, South Korea built or remodeled 10 stadiums around the country. This was the first time that South Korea had hosted the event. On the field the home team had its best result ever, reaching the semifinal round. Off the field the celebrants who flooded the streets of Seoul numbered in the millions. Photographs of the throngs filled Korean newspapers and appeared in media around the world.

      Teams from all over the continent, including North Korea, participated in the Asian Games. As in the 2000 Olympic Games in Sydney, Australia, the two Korean teams entered the field together, bearing a single white flag with the silhouette of the Korean peninsula in blue. The teams competed separately, however. Throughout, the South Korean fans rooted for the North Korean teams in a positive show of reconciliation toward their northern rivals.

      While President Kim could bask in the success of the World Cup and Asian Games, he did suffer several political setbacks during the year. Two of his sons were arrested and charged with taking bribes. In midyear he suggested a new prime minister, Chang Sang—the nation's first female candidate for the position—but the National Assembly rejected the nomination. A month later, on August 8, in the elections for the National Assembly, Kim's party suffered a huge defeat that further weakened the president's ability to pass new legislation. Public opinion polls placed support for Kim at less than 10%.

      Relations with North Korea were up and down. On the positive side, April saw the fourth reunion in three years of families separated by the political division of the Korean peninsula. One hundred elderly South Koreans visited relatives in the North. On the negative side, there was a firefight on the Yellow Sea involving naval ships of both countries. Even more troubling to relations was the admission by the North Koreans in October that they were, in violation of agreements, involved in work on nuclear weapons. At a meeting in Mexico on October 23, South Korea joined the U.S. and Japan in a warning to Pyongyang.

      Toward the end of the year, tensions on the peninsula were lessened when North Korea indicated that it was going to experiment with a new economic policy. Following the model of the Chinese, North Korea announced that it was going to open a special economic zone where capitalist enterprises could operate without interference from the central government. Pyongyang first stated that the location would be near the Chinese border to the north but later indicated that Kaesong, a city near the South Korean border, would be home to the new zone. Officials hoped to attract South Korean as well as international investors to provide capital and expertise for the endeavour.

Mark Peterson

▪ 2002

Area:

99,461 sq km (38,402 sq mi)

Population

(2001 est.): 47,676,000

Capital:

Seoul

Head of state and government:

President Kim Dae Jung

      In late 2000 South Korean Pres. Kim Dae Jung was awarded the Nobel Peace Prize for his efforts to bring peace to the peninsula by way of negotiations with North Korea. In early 2001, however, cold water was thrown on these efforts by none other than Korea's closest ally—the United States. Soon after his inauguration in January, U.S. Pres. George W. Bush announced that the U.S. wanted to review its policy toward North Korea. In March President Kim visited the Bush White House but was unable to persuade the Americans to again get on board his program for negotiations. The situation eventually improved, and Secretary of State Colin Powell (see Biographies (Powell, Colin Luther )) announced at midyear that the U.S. would be interested in reopening discussions with North Korea.

      South Korean–Russian relations took a step forward in February when Russian Pres. Vladimir Putin visited Seoul. The two countries agreed to increase economic cooperation, and South Korea joined Russia in expressions of opposition to American development of a missile-defense system. Within a few weeks, however, American protests had pushed the South Korean government into rethinking its position. By late March the confusion over foreign policy had led to a shuffle of the president's cabinet; among the changes were the office of foreign minister—Lee Joung Binn was replaced by Han Seung Soo, formerly trade minister and ambassador to the U.S.

      South Korea opened a new airport in late March. Inchon Airport, located outside Seoul and built at a cost of $5.5 billion, could handle 27 million passengers per year. The new facility could be expanded to handle 100 million passengers by the year 2020.

      Relations with Japan took a turn for the worse when the textbook controversy again flared up. As in the past, Japan's officially sanctioned textbooks played down the aggressive role of the Japanese in their invasions of Asian countries during World War II. The controversy hit the press in April and in protest South Korea canceled a planned joint military exercise in May. The National Assembly passed a resolution condemning the Japanese action. The dispute had a peaceful resolution by the end of the year, when Japanese Prime Minister Junichiro Koizumi (see Biographies (Koizumi, Junichiro )) visited Seoul and apologized for the errors.

      There was both good news and bad news on the economic front. The best of the good news was that South Korea paid off the last of the loans from the International Monetary Fund (IMF) bailout. The economic disaster that hit the country in December 1997—and was thereafter referred to in South Korea as the “IMF period”—was officially over, although there were still many economic problems. In mid-August the government announced that 40 companies were going to collapse. By mid-November the central bank and the Finance Ministry had announced that the economy would probably grow a meagre 2.5% during the year.

      South Korea, though disappointed in the lack of progress in talks with North Korea and the U.S., pushed ahead with contacts with the North. Although Red Cross talks and family visits were suspended, South Korea continued its humanitarian aid to North Korea on the one hand and tourism to the special tourist zone in the Diamond Mountains on the other. Tourism was an important source of income for North Korea, and South Korean aid, together with aid from many other countries, had become essential to preventing even greater human suffering in the North.

Mark Peterson

▪ 2001

Area:

99,373 sq km (38,368 sq mi)

Population

(2000 est.): 47,275,000

Capital:

Seoul

Head of state and government:

President Kim Dae Jung

      Millions of South Koreans gathered around their television sets on Oct. 13, 2000, to hear the news that their president, Kim Dae Jung, had been awarded the Nobel Prize for Peace. (See Nobel Prizes.) Kim was praised by the Norwegian Nobel Committee for his decades-long fight for democracy and for “his visit to North Korea [which] gave impetus to a process which has reduced tensions between the two countries. There may now be hope that the Cold War will also come to an end in Korea.”

      The Nobel citation referred to the summit meeting between Kim and the leader of North Korea, Kim Jong Il, in Pyongyang on June 13–15. This historic meeting was seen as a vindication of the South Korean president's “sunshine” policy of reconciliation with the North. At times it had looked as if the policy was having little or no effect. All South Korea seemed to get in return for gestures such as allowing the Hyundai Group to open a tourist destination in North Korea were submarine incursions and missile tests. Kim persisted, however, despite the North's provocations.

      A major breakthrough might have been his March 9 speech in Berlin, in which Kim stated Seoul's willingness to assist North Korea economically and called for direct government-to-government talks. After the summit, events moved quickly. Work began on a rail link between the two countries; Northern political prisoners held in the South since the end of the war were allowed to go home; and the defense ministers of the two countries met on the southern island of Cheju.

      While Kim basked in the glow of international approval, some of his own people were less enthusiastic about his administration. The announcement of the summit three days before the April 13 midterm National Assembly elections did not give Kim's party the bounce he had expected. His newly styled Millennium Democratic Party won more seats than it had previously held but still came in second to the opposition Grand National Party, which came very close to obtaining a majority. Kim's erstwhile ally, the United Liberal Democrats, lost badly and was reduced to 17 seats.

      South Korea's economy continued its strong recovery from the financial crisis of 1997. Though gross domestic product had grown by 13% in the second half of 1999, growth was anticipated to slow down to a more sustainable 7% to 10% during 2000. Foreign exchange reserves exceeded $80 billion, up sharply from the low of $7 billion two years earlier, and unemployment receded from its peak of more than 8% to less than 5%.

      Some of the nation's largest business conglomerates, known as chaebol, were not so healthy. Daewoo and Hyundai suffered from large debts. American auto manufacturer Ford pulled out of a deal to buy the car division of Daewoo. A public feud over succession at Hyundai underscored the need for more corporate transparency. The controversy erupted after Hyundai's founder, Chung Ju Yung, ordered the transfer of the chairman of one subdivision to another Hyundai company even though Chung was no longer on the board of directors. President Kim was faulted in some quarters for not doing enough to reform and restructure the nation's economy.

Todd Crowell

▪ 2000

Area:

99,268 sq km (38,328 sq mi)

Population

(1999 est.): 46,858,000

Capital:

Seoul

Head of state and government:

President Kim Dae Jung

      What a difference a year made. The 1998 recession in South Korea, during which the economy contracted by 5.8%, was the worst that the nation had suffered since economic modernization began in the early 1960s. By 1999, however, the economy was back on a growth track. Gross domestic product expanded by 4.6% during the first quarter of the year; the stock market, fueled in part by foreign investment, rebounded, more than doubling its value in the first half of the year; and consumer sales picked up, especially in the luxury sector. Industrial output and private consumption also grew again.

      Much pain remained, however, before South Korea could fully pull itself out of the slump. At midyear unemployment still stood at more than 7% after having reached a high of 8.7% during the depths of the recession, and the banking industry had to let go some 40,000 employees. Consumer spending, still considered fragile, was expected to fall again if unemployment increased.

      The restructuring of the economy that began in 1998 bore fruit in 1999. At the beginning of the Asian economic crisis, South Korean banks had had an estimated $42 billion in nonperforming loans, representing about 17% of their total outstanding debt by the end of 1998. During that year and into 1999 the government-operated Korea Asset Management Corporation, set up to restructure the banking sector, had bought roughly half the bank loans. Seoul also infused some $25.8 billion into selected institutions. Five banks were shut down or merged with other banks. By 1999 most Korean banks met the minimum 8% capital-adequacy ratio set by the Switzerland-based Bank for International Settlements.

      The capstone of financial reform was the agreement announced on September 17 to sell Korea First Bank to an American financial concern, Newbridge Capital Ltd. It was the first time a South Korean bank had been sold to foreigners. Another deal, however, in which SeoulBank was to sell some 70% of its shares to the British-owned Hongkong and Shanghai Banking Corporation of Hong Kong, fell through in August.

      The reform of the large business conglomerates known as chaebol proved to be difficult. The objective was to reduce overcapacity by having the companies swap subsidiaries. A much-touted deal between Daewoo and Samsung failed when the two giants could not agree on terms. Samsung was to have traded its carmaking operations for Daewoo's electronic subsidiary, but Samsung had little interest in Daewoo Electronics, which specialized in low-end goods for less-developed countries.

      In politics little seemed to go right for Pres. Kim Dae Jung. The man who had promised a corruption-free administration was beset by scandals. He was forced to fire his economic adviser and ally You Jong Keun, governor of North Cholla province, after a burglar stole $100,000 from Yoo's home. Questions were raised as to why Yoo had so much cash lying around at home. Kim also fired his justice minister, Kim Tae Jung, after it was reported that the minister's wife had received expensive gifts when her husband was a prosecutor. Meanwhile, former president Kim Young Sam was making noises that he might return to active politics. Both sides of the political spectrum were maneuvering for the crucial National Assembly elections in April 2000 and the presidential election in 2002.

      President Kim's “sunshine” policy of reconciliation with North Korea was called into question during the year. Pyongyang authorities jeopardized his most successful initiative, the cruise tours to the scenic Diamond Mountain region just north of the demilitarized zone, by arresting and holding for five days a South Korean housewife on spying charges. Kim suspended tours until more guarantees to protect tourists could be worked out. Nevertheless, he remained determined not to change his policy.

Todd Crowell

▪ 1999

      Area: 99,268 sq km (38,328 sq mi)

      Population (1998 est.): 46,451,000

      Capital: Seoul

      Head of state and government: Presidents Kim Young Sam and, from February 25, Kim Dae Jung

      On Feb. 25, 1998, Kim Dae Jung made history when he was sworn in as South Korea's first president from a party in opposition to the New Korea (later Grand National) Party. Soon after taking office, Kim, a former political prisoner, pardoned some 2,300 prisoners and waived the traffic fines of more than five million South Koreans. Some human rights groups, however, criticized Kim for releasing or reducing sentences for only 22 of the 41 inmates that Amnesty International considered prisoners of conscience and for not repealing South Korea's strict National Security Law, which forbade Southerners from expressing support for North Korea.

      As he had promised during his campaign, Kim appointed Kim Jong Pil, the leader of a minority party in the National Assembly, as prime minister. To help broaden his appeal nationwide, the president had forged an alliance with Kim Jong Pil's United Liberal Democrats, ideologically at opposite ends of the political spectrum from the president's own party, the National Congress for New Politics (NCNP). For much of the year, Kim Jong Pil carried the prefix "acting" in front of his title, since the defeated Grand National Party (GNP) began the year with a majority of seats in the National Assembly and boycotted the vote for the president's nominee for prime minister. The rest of the new Cabinet was largely made up of relatively little-known academics and legislators.

      During the year Kim was gradually able to assemble a parliamentary majority for the NCNP, primarily through defections from the GNP and by the demise of the independent party that had formed in December 1997 to support the presidential aspirations of Rhee In Je. At midyear Kim launched an anticorruption drive, which the GNP insisted was meant to further weaken it. Eight GNP assemblymen were placed under investigation. GNP members expressed their complaints by boycotting the National Assembly and holding rallies across the country.

      More than any other Korean politician in recent years, Kim was determined to change the nature of the South's relations with North Korea. His new "sunshine" policy emerged soon after he took office. The main elements of the policy included allowing South Koreans the opportunity to visit relatives in the North, permitting businessmen to travel there to discuss commercial deals, and relaxing rules governing South Korean investment in the North. Perhaps the most concrete result of Kim's new policy was Chung Ju Yung's personal mission to Pyongyang in June. The founder of the Hyundai conglomerate and a North Korean native, Chung delivered some 50 trucks loaded with cattle to help feed North Koreans, and he negotiated a deal whereby South Koreans would be allowed to visit Mt. Kumgang, a popular tourist spot on Korea's eastern coast just north of the demilitarized zone. The first such visit took place in mid-November.

      On a diplomatic level, direct talks between North and South Korea resumed in Beijing after a hiatus of four years, though the negotiators failed to agree on main points of contention dealing with food aid and family visits. During an official visit to the U.S., Kim urged the U.S. to lift economic sanctions against North Korea, something considered very unlikely, given rising concern in Washington that North Korea was reneging on a deal negotiated in 1994 to curb its suspected nuclear weapons program. The same topic was discussed when U.S. Pres. Bill Clinton visited Seoul in November.

      Kim's biggest challenge was to try to lead South Korea out of its worst economic slump since the end of the Korean War. As a presidential candidate he had hinted that he might seek to renegotiate an agreement with the International Monetary Fund (IMF) on the terms of a $57 billion bailout loan extended in December 1997. Once elected, however, he endorsed the agreement and worked to implement the terms, which included a restructuring of financial institutions and business conglomerates burdened with bad debts. The IMF predicted that the South Korean economy would contract by 7% in 1998. Unemployment rose to about 10%.

      Kim visited Europe, the U.S., and China during the year, but perhaps his most important foreign policy initiative came in October with his visit to Japan. During a four-day trip to Tokyo, he extended an invitation to Emperor Akihito to visit South Korea. Such a visit, if approved by the Japanese government, would be a first. In a surprising move, the Japanese government issued a written apology expressing "deep remorse" for Japan's occupation of Korea from 1910 to 1945. For his part, Kim let it be known that he wanted to phase out a ban on Japanese cultural products, such as movies and cartoons, that had been in effect since the end of the Korean War. The lifting of the ban would undoubtedly prove popular among South Korea's young people, but Kim intended to treat the matter cautiously so as not to injure South Korea's own entertainment industry, especially while the economy was still fragile. He hoped the ban would be removed by 2002.

TODD CROWELL

▪ 1998

      Area: 99,268 sq km (38,328 sq mi)

      Population (1997 est.): 45,628,000

      Capital: Seoul

      Head of state and government: President Kim Young Sam, assisted by Prime Minister Lee Soo Sung and, from March 4, Koh Kun

      In January 1997 the Hanbo Group, one of South Korea's largest steel and construction conglomerates, collapsed with debts of about $6 billion. After carrying out an investigation into the collapse, the Supreme Public Prosecutor's Office (SPPO) indicted at least four members of Pres. Kim Young Sam's ruling New Korea Party (NKP), accusing them of taking millions from Hanbo in exchange for helping to arrange bank loans for the ailing firm. After being questioned by the SPPO on February 12, Interior Minister Kim Woo Suk resigned from his post. In a live television broadcast on February 25, President Kim issued a public apology for the Hanbo scandal. On March 4 Kim appointed Koh Kun, president of Myongji University, Yongin, and a former mayor of Seoul, to replace Lee Soo Sung as prime minister. The following day Kim reshuffled his Cabinet, replacing eight ministers, including Finance Minister Han Seung Soo. Succeeding Han was Kang Kyong Shik, who had served as finance minister in 1982-83.

      Another scandal erupted in May when Kim Hyun Chul, the son of President Kim, was arrested on charges of bribery and tax evasion. The president's son, who had helped manage his father's presidential campaign in 1992, was accused of having accepted $3.6 million in bribes from two businessmen seeking lucrative government contracts and licenses. He was also charged with having accepted $3.8 million from four other businessmen and having then laundered the money to avoid paying taxes. Kim's son was formally indicted on June 5, four days after thousands of students had congregated on the streets and campuses of Seoul to demand Kim's resignation.

      The Hanbo scandal and the arrest of Kim's son helped to turn South Korea's presidential race into a wide-open contest between three serious candidates. Kim, restricted by the constitution from succeeding himself, was too weakened politically to dictate his successor. Lee Hoi Chang, a one-time Supreme Court judge with a reputation for incorruptibility, emerged as the ruling party's nominee at the NKP national convention in July. The runner-up at the convention, Rhee In Je, governor of South Korea's central Kyonggi province, refused to abandon his campaign for the presidency, however, and two months later quit the NKP to run as an independent in the December 18 election. Making the race even more unpredictable was the entry of the popular mayor of Seoul, Cho Soon, who later withdrew to support Lee.

      In August, Lee's campaign ran into trouble when it was disclosed that his two sons had been exempted from compulsory military service for being underweight. Many Koreans suspected that Lee's sons, who each dropped 10 kg (22 lb) after an initial physical examination, had deliberately dieted in order to get below the minimum weight requirement of 50 kg (110 lb). Although no laws were broken, the scandal still managed to tarnish Lee's image as a man of integrity, and his poll ratings plummeted. Lee was dealt a further political blow when President Kim rejected Lee's proposal of an early release for former presidents Chun Doo Hwan and Roh Tae Woo, who had been found guilty in 1996 of having plotted the coup that followed the assassination of longtime strongman Park Chung Hee in 1979.

      Late in the race venerable campaigner Kim Dae Jung ) (Kim Dae Jung ), who had unsuccessfully contested each South Korean presidential election since 1971, found himself in the unfamiliar role of front-runner. With the ruling party in disarray as a result of splits and scandals, Kim Dae Jung, sensing victory, toned down his rhetoric and moderated his leftist positions, recruited several retired generals to his side, and made an effort to court business groups. He was, however, embarrassed when his adviser Oh Ik Je defected to North Korea. The defection rekindled suspicions that Kim was too sympathetic to the North.

      In the election Kim Dae Jung won with more than 40.4% of the vote; Lee Hoi Chang finished second with 38.6%. Kim was the first president who was not a member of the NKP. One of his first moves, in December, was to grant immediate pardons to Chun and Roh, who had been his bitter enemies.

      In foreign affairs the most significant event of 1997 for South Korea was a meeting with North Korea and the U.S. in New York City on March 5. Representatives of the three countries met to discuss a 1996 proposal by President Kim and U.S. Pres. Bill Clinton for peace talks aimed at formally ending the state of war on the Korean peninsula; the proposed talks would also include China. Seoul agreed to attend the meeting after Pyongyang expressed "regret" over sending a submarine loaded with commandos into South Korean waters in 1996. Although no breakthroughs were reported, the meeting marked the first official contact between North and South Korea in three years and was seen by international observers as an important step forward in North-South relations. After his election Kim Dae Jung announced his intention to seek a summit meeting with North Korean leaders.

      Statistics indicate more economic troubles on the horizon for South Korea. The Samsung Economic Research Institute forecast that growth of gross domestic product would amount to about 5% at best in 1997, far below the 9% average of previous years. In January factory production sank to 77% of capacity, a four-year low. The trade deficit expanded. Speaking on the 78th anniversary of the March 1 Independence Declaration, President Kim urged the country to reform key institutions and to take measures to strengthen South Korea's international competitiveness.

      In July the Kia Group, the country's third largest maker of automobiles, sought protection from bankruptcy after it was unable to repay about $314 million in outstanding loans. In December the the Halla Group, the nation's 12th largest conglomerate, collapsed after failing to repay some $200 million in debt.

      The general weakness in the economy was felt by the financial sector. Probably worst hit was Korea First Bank, the fourth largest bank in the country. Korea First had large outstanding loans with both Hanbo and Kia as well as some other risky ventures and posted a $400 million loss for the first half of 1997, with the expectation that the number would exceed $1 billion before the end of the year. With the currency falling, Seoul finally sought a bailout from the International Monetary Fund. On December 3 South Korea agreed to an international rescue package amounting to $57 billion, the largest such rescue ever. The money was to be used to help increase the nation's depleted foreign currency reserves, which in turn was expected to slow the devaluation of the won and help the nation pay off foreign debt. Late in December commercial lenders gave South Korean borrowers a one-month extension on $15 billion of loans due at the end of the year.

GEORGE T. CROWELL

      This article updates Korea, South, history of (Korea, South).

▪ 1997

      A republic of northeastern Asia on the southern half of the peninsula of Korea, the Republic of Korea (South Korea) borders the Sea of Japan, the Korea Strait, the Yellow Sea, and the Democratic People's Republic of Korea at roughly the 38th parallel. Area: 99,394 sq km (38,376 sq mi). Pop. (1996 est.): 45,232,000. Cap.: Seoul. Monetary unit: won, with (Oct. 11, 1996) a free rate of 829 won to U.S. $1 (1,306 won = £ 1 sterling). President in 1996, Kim Young Sam; prime minister, Lee Soo Sung.

      South Korea came to a virtual halt on Aug. 26, 1996, as Kim Young Il, chief of a three-member judicial tribunal, delivered guilty verdicts against two of its former presidents, Chun Doo Hwan, and his successor, Roh Tae Woo. The sentences were then pronounced: death for Chun; 22 1/2 years' imprisonment for Roh. The two were convicted of having plotted the 1979 coup, now officially called a "mutiny," that followed the assassination of longtime strongman Park Chung Hee. They were also found guilty of treason in connection with the May 1980 massacres of hundreds of people in the southern city of Kwangju, where protests had erupted soon after Chun extended martial law to the whole country. Roh was fined $350 million and Chun $270 million, the amount of the bribes each had received while in office. At the year's end their sentences were under appeal.

      Also convicted were the bosses of some of South Korea's largest business conglomerates, or chaebol. In all, nine executives were declared guilty of having bribed Chun and Roh in return for government favours. The most prominent were Kim Woo Choong, chairman of the Daewoo Group, who received two years in jail; Choi Won Suk (see BIOGRAPHIES (Choi Won Suk )), chairman of the Dong Ah Group, 2 1/2 years; and Lee Kun Hee (see BIOGRAPHIES (Lee Kun Hee )), chairman of the Samsung Group, two years, suspended. They were free on bail pending appeal, and none of the companies said that their businesses would be seriously affected by the verdicts. The business leaders maintained that they had been forced to make contributions or lose business opportunities.

      This historic reckoning had begun to unfold on Oct. 27, 1995, when Roh went on television and tearfully confessed that he had amassed a $650 million political slush fund. Most South Koreans had realistically assumed that political donations were a fact of life, but they were shocked at the sheer size of the fund. They were even more astounded when Roh admitted keeping about $200 million for himself. He denied that the money was taken in exchange for favours. The sentence passed on Roh was less severe than many had expected. The tribunal took into account his democratic reforms, which allowed him to pass power on to a civilian successor, the incumbent president, Kim Young Sam.

      Veteran pro-democracy activist Kim Dae Jung, who had been himself sentenced to death for allegedly having incited the Kwangju uprising, said that the verdicts failed to close the books on what many Koreans considered the most traumatic event in their recent history. Although the court found Chun guilty of complicity in the bloody crackdown, it did not specifically blame anyone for it.

      Student radicalism had been relatively quiescent in South Korea since democracy was restored in 1987. Students occasionally battled with riot police on the streets of Seoul, but this had become something of a fringe event. The year saw the most violent student clashes in the capital in recent times, however, during nine days in mid-August. On August 20 the unrest finally ended when riot police backed by helicopters fired tear gas and battled their way past improvised barricades to occupy the campus of Yonsei University in Seoul, which had been taken over by several thousand pro-North Korean student demonstrators. The Hanchongnyon (Korean Federation of University Student Councils), a leftist student organization often at the centre of student agitation, had invited student counterparts from North Korea to attend a "Unification Festival" on the campus. The government warned the students that such activities would violate the strict National Security Law, which prohibits any kind of pro-North Korean demonstration. The students, however, decided to ignore the warning and sent representatives to Pyongyang, while those at the university set up barricades and prepared to battle with riot police. Ultimately, 5,500 students were arrested. More than 1,000 police and students were injured.

      Pres. Kim Young Sam's police were able to crack down because, unlike in the late 1980s, when the middle classes rallied behind them, the student radicals had little broad support. Although many people may have supported their call for the withdrawal of U.S. troops and the abolition of the National Security Law, many more felt that they were naive in their undisguised support of the North Korean regime. Late in December some 350,000 workers went on strike in protest against new labour laws that gave greater freedom to businesses to lay off workers and delayed by three years the authorization of labour unions. It was the nation's largest strike ever.

      Kim's ruling New Korea Party (it changed its name from the Democratic Liberal Party in December 1995) pulled victory out of what was almost certain defeat in the midterm parliamentary elections that were held on April 11. His party won 139 seats of the 299 in the National Assembly. Though short of a majority, it was considerably more than the 100 seats that the most optimistic supporters had been forecasting. Electoral disaster had been predicted since the June 1995 local elections, in which the government party candidates were soundly defeated throughout the country.

      Help for President Kim's followers came from an unexpected quarter—North Korea. In the days before the voting, Pyongyang sent troops into the demilitarized zone for three consecutive days. The administration, no doubt supported by media hype over fears of a projected northern invasion, exploited the North Korean sabre rattling to good effect, especially in Seoul, particularly sensitive to such threats because of its close proximity to the border. Seoul had been a bastion of support for veteran opposition leader Kim Dae Jung, but it was the New Korea Party of President Kim that took the largest number of seats. Kim Dae Jung's party, the National Congress for New Politics, won just 79 seats, and many commentators believed that the poor showing might finally finish the veteran leader as a viable candidate for president in the 1997 election.

Foreign Affairs.

      In foreign affairs the most significant events were two summit meetings, one with U.S. Pres. Bill Clinton and the other with Japanese Prime Minister Ryutaro Hashimoto, both held on the southern resort island of Cheju. In the meeting with Clinton, South Korea set aside some of its suspicions and agreed to a proposal that there be a four-power conference between the belligerents of the 1950-53 Korean War to decide upon a final peace treaty. South Korea-Japan relations, always sensitive, and soured by a flare-up over disputed islets in the Sea of Japan, were improved during the year by a friendly meeting with Hashimoto. Another chance to develop friendlier ties was the decision to serve as cohost with Japan for the 2002 World Cup in soccer.

      (GEORGE T. CROWELL)

      This article updates Korea, South, history of (Korea, South).

▪ 1996

      A republic of northeastern Asia on the southern half of the peninsula of Korea, the Republic of Korea (South Korea) borders the Sea of Japan, the Korea Strait, the Yellow Sea, and the Democratic People's Republic of Korea at roughly the 38th parallel. Area: 99,392 sq km (38,375 sq mi). Pop. (1995 est.): 44,834,000. Cap.: Seoul. Monetary unit: won, with (Oct. 6, 1995) a free rate of 768.60 won to U.S. $1 (1,215 won = £ 1 sterling). President in 1995, Kim Young Sam; prime ministers, Lee Hong Koo and, from December 18, Lee Soo Song.

      In 1995 South Koreans confronted the dark side of their recent past. Two former presidents, Chun Doo Hwan (1980-88) and Roh Tae Woo (1988-93), were arrested and indicted for insurrection for their part in the Dec. 12, 1979, coup that brought Chun to power. Both were then senior army generals. Roh provided the troops that tipped the balance toward Chun. Eight years later Roh narrowly won the presidency himself in South Korea's first modern democratic election. Roh stunned the nation when on October 27 he went on television and tearfully confessed to having amassed a political slush fund of approximately $650 million. Most Koreans had assumed that "donations" were a normal part of politics. They were nevertheless shocked at the sheer size of the fund and the fact that Roh admitted that he had kept more than $200 million of it for his own use.

      Prosecutors later accused Roh of having taken $369 million in bribes from the large business conglomerates called chaebols. Roh admitted taking the payments but denied that they were bribes. If convicted of the several charges, both former presidents technically could receive the death penalty, although that was considered unlikely. Eight leaders of some of South Korea's biggest business ventures, including the chairmen of Daewoo, Samsung, and Hanbo, were also indicted for having given Roh money or laundered it for him. The unfolding scandal was another blow to Pres. Kim Young Sam, who was already suffering from falling popularity and electoral reverses. His main political rival, the veteran campaigner Kim Dae Jung, quickly acknowledged that he had received about $2.5 million from Roh's fund, implying that the other Kim, being a member of Roh's own party, must have received much more. The president denied it.

      On June 27, 1995, South Koreans went to the polls in a historic election. For the first time since Park Chung Hee seized power in 1961, local and provincial government officials were elected rather than appointed. Some 5,700 politicians, including 15 governors or mayors of major cities, were chosen in what was considered a fair election.

      The outcome was a disaster for Pres. Kim Young Sam's Democratic Liberal Party (DLP), which won only 5 of the top 15 posts. The main opposition, the centre-left Democratic Party, took over control of Seoul, the capital, by winning not only the mayor's office but 23 of the city's 25 wards as well. Even the new right-wing United Liberal Democrats, formed after Kim Jong Pil quit as chairman of the DLP, managed to win three governorships.

      The election results significantly altered the nation's political landscape. When Kim was elected in 1992—the first president in three decades not to come from the ranks of the military—it seemed to permanently relegate to the sidelines two of the country's most prominent politicians: Kim Jong Pil, who opted to join the ruling coalition, and Kim Dae Jung, who retired from politics to form a foundation dedicated to reunifying Korea.

      Within months of taking office, Kim Young Sam saw his popularity soar to 90%, the highest mark ever recorded for a South Korean president. In 1995, however, halfway through his five-year term, Kim no longer had the same appeal. His reform initiatives appeared to be more cosmetic than real, and corruption was as deeply rooted as ever. With Kim's rating at about 30%, political analysts interpreted the June 27 election as an implicit affirmation by voters that Kim Dae Jung was not far off target when he made reference to "two and a half years of misrule and blunders."

      After the June election Kim Dae Jung came out of retirement and in September launched a new party, the National Congress for New Politics. Most assemblymen from the Democratic Party promptly joined its ranks. Kim Dae Jung remarked that he had not made up his mind about running for president for the fourth time in 1997. A decision could depend on how well his candidates did in the National Assembly elections in April 1996. If voters once again rejected the DLP, as many believed they would, especially in the wake of the scandal, pressure could mount to change South Korea's presidential form of government to a parliamentary system. Trying to distance itself from the scandal, the ruling party in December changed its name to the New Korea Party.

      Kim's popularity also suffered from a series of man-made disasters, which seemed to call attention to a seamy side of South Korea's rush toward economic development. The worst was the collapse of the Sampoong Department Store in Seoul on June 29, which took the lives of more than 500 shoppers and store clerks. This, however, was only the worst of a number of recent accidents that killed more than 1,000 people and caused billions of dollars in damage. On April 28 a gas explosion tore through the heart of Taegu, South Korea's third largest city, killing more than 100 people. In October 1994 the Songsu Bridge spanning the Han River in Seoul had collapsed.

      Corruption appeared to be the root cause of many of these disasters. Five builders were arrested and charged with direct or indirect responsibility for the Taegu disaster. Korean authorities also arrested the founder of Sampoong after evidence emerged that local bureaucrats had been bribed to approve the addition of an unplanned fifth story, which caused the collapse of the entire structure. Ironically, the accident occurred only two days after voters ousted the mayor of Seoul and 23 of the 25 ward administrators.

      Many of Korea's world-class construction corporations concentrated on prestige projects in other countries and were therefore unable to handle all of the country's infrastructure needs. With millions of people pouring into the cities and their sprawling industrial suburbs, the demand for new construction was often met by small and medium-sized firms. The tragedy that occurred at the Sampoong building confirmed the seriousness of the problem.

      Labour troubles surfaced in the wake of efforts to privatize Korea Telecom (KT), the telephone company that was 80% owned by the state. When 64 union leaders were fired or demoted for encouraging unrest, 13 took refuge in a Roman Catholic cathedral and a Buddhist temple. Nevertheless, after a two-week standoff, police raided the premises in an unprecedented violation of church sanctuary.

      South Korea made little progress toward reconciliation with North Korea during the year. The highly touted summit meeting between the presidents of the two Koreas was postponed indefinitely after the death of Kim II Sung in 1994. In May Seoul approved two pilot investment projects in North Korea. Daewoo Corp. planned to spend $5 million making shirts, jackets, and travel bags, and Kohap Ltd., a trading company, was also prepared to invest millions producing plastic bottles, textiles, and garments. South Korea had lifted a ban on direct trade with an investment in the North in November 1994.

      Relations with Japan took on an acrimonious air because 1995 marked the 50th anniversary of the end of World War II. It was a reminder of the years during which Korea had been occupied by Japan. Michio Watanabe (see OBITUARIES (Watanabe, Michio )), a former Japanese Cabinet minister, sparked a riot in Seoul when he remarked that the Koreans had "harmoniously" signed the treaty annexing the country to Japan in 1910. As if to exorcise the memories associated with 35 years of occupation, South Korea began demolishing an imposing building in downtown Seoul that had been erected by Japan as a palace for its then governor-general.

      (GEORGE T. CROWELL)

      This updates the article Korea, South, history of (Korea, South).

▪ 1995

      A republic of northeastern Asia on the southern half of the peninsula of Korea, the Republic of Korea (South Korea) borders the Sea of Japan, the Korea Strait, the Yellow Sea, and the Democratic People's Republic of Korea at roughly the 38th parallel. Area: 99,274 sq km (38,330 sq mi). Pop. (1994 est.): 44,436,000. Cap.: Seoul. Monetary unit: won, with (Oct. 7, 1994) a free rate of 799 won to U.S. $1 (1,271 won = £ 1 sterling). President in 1994, Kim Young Sam; prime ministers, Lee Hoi Chang, Lee Yung Duk from April 22, and, from December 17, Lee Hong Koo.

      The crisis over North Korea's nuclear program and the death of North Korean leader Kim Il Sung in July affected events in South Korea in 1994. At the truce village of Panmunjom in March, North and South Korea had begun talks to keep the peninsula free of nuclear weapons and set up a presidential summit. The negotiations collapsed, however, when the North threatened to turn Seoul into a "sea of fire" for supporting sanctions against Pyongyang. Seoul had backed U.S. efforts to seek a UN Security Council vote to force North Korea to allow inspections of all its nuclear facilities to determine whether it was diverting plutonium to the production of nuclear weapons. North Korea said that it would consider sanctions an act of war.

      As tensions on the peninsula mounted, U.S. Pres. Bill Clinton announced in late March that the U.S. would send Patriot antimissile batteries to South Korea. South Korean Pres. Kim Young Sam explained that they would be used to defend U.S. military bases. The first batch of missiles arrived in April. That month U.S. Defense Secretary William Perry visited Seoul to discuss plans to defend the South against North Korean aggression. The South Korean government agreed to modernize its forces by buying such sophisticated U.S. weapons as Apache attack helicopters and antitank missiles.

      After months of escalating threats, North-South relations took an abrupt turn toward reconciliation. On June 28 both sides agreed to a date for a historic summit, the first ever between the presidents of North and South Korea. Kim Young Sam was to travel to Pyongyang on July 25 to meet his northern counterpart. This breakthrough came 10 days after former U.S. president Jimmy Carter visited Pyongyang. Carter's mediation also led to the reopening of talks between North Korea and the U.S. over the North's nuclear program. These negotiations put South Korea in the delicate position of being an observer of events that would directly affect its security. In April South Korea had made a major concession by dropping its demand for an exchange of special envoys with North Korea as a condition for approving direct U.S.-North Korean talks to resolve the nuclear crisis.

      In his first public remarks on relations with North Korea following the death of Kim Il Sung, Kim Young Sam supported the Geneva accord. He also pledged to supply Pyongyang with nuclear power technology if it opened its nuclear facilities to international inspection. In further talks with the U.S., however, North Korea ruled out South Korea's participation in building the nuclear power plants. When the U.S. continued to insist that the South have a role in providing nuclear technology to the North, the talks were stalemated.

      When news of Kim Il Sung's death was announced, the government in Seoul refused to send official condolences to Pyongyang. On the day of Kim's funeral, thousands of riot police took up positions across South Korea to prevent public mourning. Hundreds of defiant students were arrested.

      In mid-August, militant students staged a reunification rally in Seoul to coincide with celebrations of Korea's liberation from Japan in 1945. Some 6,000 students battled riot police, who arrested more than 1,000 demonstrators. The rioting that continued the next day led to more arrests.

      The government crackdown surprised many South Koreans. Kim Young Sam, a former dissident and the nation's first president in more than 30 years who had not had a military career, was criticized for using the harsh National Security Law to arrest student demonstrators, as former military governments had done.

      During the crisis with North Korea, the president kept firm control over government policy. Prime Minister Lee Hoi Chang resigned on April 22 following a dispute with Kim over how to respond to the nuclear crisis. Lee had insisted on his right to approve all decisions made by a Cabinet group set up to coordinate government policy on North Korea. Lee himself had not been included in the group. Previously, the office of prime minister had been largely ceremonial. Lee, a former Supreme Court justice, sought to play a more direct role in policy making. The president replaced Lee with Lee Yung Duk, deputy premier and minister for reunification. In May the president initiated another shake-up in his administration by replacing seven vice-ministers, including the vice-minister of foreign affairs, who had publicly contradicted administration policy regarding North Korea. None of those replaced was given new assignments.

      The government was drawn into a domestic controversy when hundreds of reformist monks staged demonstrations at the Chogye Temple complex in central Seoul to protest the reelection of Suh Eui Hyun as head of the nation's largest Buddhist order. After weeks of clashes between the reformists and Suh's supporters, riot police stormed the temple complex on April 11 and detained 134 monks. Suh was forced to resign. The reformists accused him of accepting $10 million from a local businessman and funneling the money to Kim Young Sam's 1992 election campaign.

      The president was embarrassed by a corruption scandal in Inchon, one of South Korea's largest cities. Government prosecutors had arrested seven city officials for embezzling more than $1 million in tax revenues. In September the city's mayor, Choi Ki Son, a close associate of the president, resigned and took responsibility for the scandal. Kim Young Sam renewed his pledge to fight graft and corruption.

      On October 29 the prosecutor's office in Seoul ruled that two former presidents, Chun Doo Hwan and Roh Tae Woo, had participated in "premeditated military rebellion"—the 1979 military coup that brought them to power. Many felt that the effects of a prosecution would have been so disruptive that the nation would be better served if no trials were held. The government's decision not to prosecute the men so angered Lee Ki Taek, leader of the opposition Democratic Party, that he disrupted the National Assembly proceedings for several weeks. After resigning his seat on November 25, he called upon other legislators to follow his lead and force new elections.

      A bright spot for the government was the economy. For several years economic growth had slowed to between 5% and 6%—brisk for most countries but a decline for South Korea. The government predicted gross domestic product growth of 8.5% for 1994. The stock market index leaped some 10% in September, breaking the 1,000 mark to hit a record high. The Finance Ministry announced in October that the ceiling on foreign holdings in Korean companies would be raised from 8% to 10% by year's end and to 15% in 1995. The country's export growth rate averaged 14% during the first 10 months of the year, the highest it had been since 1988. This success was attributed to South Korea's restructuring of its industries, to the high value of the Japanese yen, and to economic recoveries in Europe, the U.S., and Japan. (JOSEPH L. NAGY)

      This updates the article Korea, South, history of (Korea, South).

▪ 1994

      A republic of northeastern Asia on the southern half of the peninsula of Korea, the Republic of Korea (South Korea) borders the Sea of Japan, the Korea Strait, the Yellow Sea, and the Democratic People's Republic of Korea at roughly the 38th parallel. Area: 99,274 sq km (38,330 sq mi). Pop. (1993 est.): 44,042,000. Cap.: Seoul. Monetary unit: won, with (Oct. 4, 1993) a free rate of 814.40 won to U.S. $1 (1,234 won = £ 1 sterling). Presidents in 1993, Roh Tae Woo and, from February 25, Kim Young Sam; prime ministers, Hyun Soong Jong, Hwang In Sung, and, from December 16, Lee Hoi Chang.

      Kim Young Sam, the first South Korean president in more than 30 years with no ties to the military, wasted little time carrying out his campaign pledge to battle corruption. Only weeks after being sworn in on Feb. 25, 1993, Kim launched one of the most comprehensive anticorruption campaigns in the nation's history. Before the year was out, he had purged thousands of bureaucrats, military leaders, and businessmen; released thousands of political prisoners; launched wide-ranging investigations into administrative abuses; and initiated sweeping financial reforms. In the process he earned record-high public-approval ratings.

      A longtime opposition leader before his Reunification Democratic Party and Kim Jong Pil's New Democratic Republican Party merged with the ruling Democratic Justice Party in 1990 to form the Democratic Liberal Party, Kim began his quest for a "clean and just society" by revealing his own net worth—$2.1 million—and pledging never to accept political donations during his five-year term. He then called on all 161 ruling party lawmakers to disclose their personal assets. The subsequent revelations sparked such public outrage that several high-ranking legislators, including the speaker of the National Assembly, Park Jyun Kyu, were forced to resign. In May the National Assembly passed a law requiring all of its members, some 7,000 government officials, and senior military officers to reveal their assets.

      Kim's Cabinet was a mix of political veterans and newcomers. He appointed the party's chief policy maker, former general Hwang In Sung, prime minister. Hwang was given the task of reviving the country's sagging economy. Another key appointment was the naming of Lee Hoi Chang, a Supreme Court judge, to head the Board of Audit and Inspection (BAI), which was to spearhead the president's anticorruption drive. Kim set a precedent by appointing Kim Deok, an academic, head of the powerful Agency for National Security Planning, which in the past had been accused of persecuting political dissidents.

      The president's vigorous ethics campaign so upset conservatives within the ruling party that they hit back. On March 8 Kim was forced to fire three newly appointed ministers after reports surfaced of past misdeeds. Justice Minister Park Hee Tae was said to have used unfair means to get his daughter into a university; Health Minister Park Yang Shil was accused of real-estate speculation; and Construction Minister Huh Jae Hyung was accused of "irregularities." In addition, Seoul Mayor Kim Sang Chul was fired for involvement in illegal land development. The embarrassing revelations, however, did nothing to slow down the president's efforts.

      The military was one of Kim's main targets. During his first month in office he replaced the army chief of staff and the head of military intelligence. Next came investigations into the military's procurement program and into charges of payoffs for military promotions. In time, 13 officers, including five air force generals, the former air force chief of staff, and seven other officers, were arrested on charges of receiving payoffs for promotions. The Defense Ministry later released the 13 from jail, but it announced that all would be discharged from active service. In a separate probe, the BAI investigated the procurement of weapons systems. Former air force chief of staff Gen. Chung Yong Ho charged that the government of former president Roh Tae Woo may have accepted bribes to switch a $5.2 billion contract for fighter planes from McDonnell Douglas Corp. to General Dynamics. The National Assembly investigated the matter in September, but no formal charges were made.

      The BAI soon extended its investigation to all military procurement programs, including the purchase of submarines, tanks, and other equipment. In October two former navy chiefs, Kim Chul Woo and Kim Chong Ho, were sentenced to six years in jail for accepting bribes for defense contracts and for selling promotions. Other casualties of the anticorruption campaign included Chief Justice Kim Duck Joo and Kim Hyo Eun, the national police chief; both resigned in September after disclosing their assets.

      Kim further tightened his hold on the military by removing top generals with ties to former military regimes. In April he dismissed two three-star generals who had headed army units linked to the 1979 coup that brought Chun Doo Hwan to power. In May he fired Gen. Lee Pil Sup, the chairman of the joint chiefs of staff, and two other senior generals for their involvement in the 1979 coup.

      The administration's other major concern was the economy. The growth rate had slipped to 4.7% in 1992, the lowest in a decade. In May the government released its five-year economic-reform plan. Its goal was to cut government red tape and replace most government controls with free-market mechanisms by 1997. The program, among other things, called for deregulation of interest rates and the phasing out of subsidized government loans to industry by private banks.

      Kim dropped his biggest financial bombshell on August 12 when he announced on national television that anonymous or false-name financial transactions would become illegal. The use of false-name accounts allowed business conglomerates to funnel millions of dollars into the ruling party coffers. It also contributed to corruption by allowing officials to speculate in the stock and real-estate markets. It was, moreover, a handy way to avoid income taxes. The reform was considered a keystone in Kim's anticorruption campaign.

      On December 9 Kim announced that he had agreed to allow foreign rice imports as part of the General Agreement on Tariffs and Trade. Other countries had also made concessions in order to improve the world's economy by removing or lowering international trade barriers. The move led to Prime Minister Hwang's resignation and a major Cabinet reshuffle. (JOSEPH L. NAGY)

      This updates the article Korea, South, history of (Korea, South).

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