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Koreans see U.S., Japanese exploiting financial crisis
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Copyright ) 1997 Nando.net
Copyright ) 1997 The Associated Press
SEOUL, South Korea (December 4, 1997 2:47 p.m. EST http://www.nando.net)
-- In the aftermath of a $57 billion bailout of their economy, South
Koreans are fuming about alleged American and Japanese efforts to pry
open their long-protected markets and profit from their misfortune.
Many South Koreans -- as well as their media -- complained Thursday that
the United States and Japan influenced the International Monetary Fund's
negotiating positions to reap economic windfalls, including entry into
South Korea's financial markets and a loosening of its import
restrictions.
"Definitely, there was pressure from the U.S. and Japan," Lee Pil-sang,
an economics professor at Korea University, said on Yonhap TV. "Korea's
problem is in the short-term cash flow. What does that have to do with
opening the finance market or abolishing its import policy?"
Newspapers carried strongly anti-U.S. and anti-Japanese cartoons and
commentaries, describing the IMF as controlled by the United States and
"the governor of the occupation army."
"It's not desirable that (the United States and Japan), allies of South
Korea, made use of our desperate situation for their own gains," the
mass-circulation Dong-A Ilbo said in an editorial.
Dong-A and other Korean newspapers claimed that an assistant U.S.
Treasury secretary secretly visited South Korea and stayed at the hotel
where the IMF bailout talks were being held, leading the IMF like a
puppet.
The South Korean government, however, denied the reports, saying it has
no knowledge of any U.S. or Japanese intervention in its talks with the
IMF. U.S. officials acknowledged America's interest in the negotiations,
but denied any U.S. influence on them.
"Stabilization of the Korean economy is important because Korea is the
fifth largest trading partner of the U.S.," said Patrick J. Linehan, a
U.S. Embassy spokesman. "Its stability is in the interest of the U.S.
and the whole world. But the negotiations were strictly between Korea
and the IMF."
The Japanese Embassy declined comment on the allegations. However, an
official at the Foreign Ministry in Tokyo, who spoke on condition of
anonymity, said he knew of no Japanese or U.S. effort to use the IMF
loan to get economic advantage over South Korea.
The requirement that South Korea open its markets is welcome news for
American, Japanese and other foreign companies that have unsuccessfully
sought to liberalize South Korean's restrictive trade policy.
The government has jealously guarded South Korea's car and computer
chips industries from collapse and foreign competition. It provided a
slew of incentives -- cheap loans, tax benefits and high tariffs and
other trade barriers -- that kept foreign autos' share of the domestic
market to less than 1 percent.
Only this year, the government spent hundreds of millions of dollars to
take over the near-bankrupt Kia, South Korea's second-largest car maker,
and keep it afloat.
Under the new IMF rules, such protections will no longer be possible.
For years, South Korean car and computer chip makers -- all owned by the
country's debt-ridden conglomerates -- have borrowed and expanded at
astounding speed. They flooded the world market with cheap cars and
microchips, leading South Korea's export-driven economy.
"Now all that will have to change," said Yun Kun-young, an economist at
Seoul's Yonsei University. "South Korea's leading industries ... will
slow down radically for the first time."
The IMF also required South Korea to slow down economic growth, raise
interest rates, tighten credit control and open its markets wider to
foreign imports -- measures that will make loans harder to get and
increase competition in already saturated domestic markets.
"Everyone will tighten his belt. Who's going to buy new cars?" said Nam
Sung-soo, an industry analyst at Daishin Securities Co.
The South Korean media said the IMF, guided by the United States, forced
South Korea to simplify or ease import procedures for American cars -- a
point that the United States raised but failed to get in previous talks
with Seoul.
The media also claimed that Japan used the IMF to force South Korea to
lift import restrictions on certain Japanese industrial goods beginning
in 1999, a year ahead of schedule.
-- By KYONG-HWA SEOK, The Associated Press
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