If the Asian economic crisis arises in part from the absence of democracy, the latest events in South Korea demonstrate that even where it has been established, the potential for conflict is not reduced. Yesterday the independent Korean Confederation of Trade Unions staged a general strike against sackings and job losses arising from industrial restructuring, especially in the automobile sector. Its action attracted substantial support from workers concerned about an unfair distribution of repaying a $57 billion rescue package provided by the International Monetary Fund (IMF) last December. It also highlights the difficulties facing President Kim Dae-jung after several months in office on a platform committed to bringing his country through these travails without destroying its development potential. President Kim came to power pledged to co-operate with trade unions and to spread the burden fairly between workers, companies and government. He is grappling with resistance from interest groups with deeply entrenched positions in the socio-economic complexes responsible for the country's rapid development. The large industrial conglomerates or chaebol straddle many sectors and are closely interlocked with the banking system and the bureaucracy. They are inclined to blame competing multinationals for pushing restructuring plans in order to gain a greater foothold in the Korean market. They are able to call in support from sections of the bureaucracy which helped to build them up in the last two decades, and from opposition political parties with a nationalist agenda.
Given its very success, South Korea was facing the need to open up its protected economy to international investment and competition, even if the country had not been exposed to the recent economic whirlwinds. And in recent months the government has made substantial progress towards this objective, as financial markets have been opened and bank regulations restructured. Social protection for workers losing their jobs has also been improved. But there is widespread dissatisfaction with how the costs of the IMF bailout have been distributed. They have fallen heavily on those with average or middle incomes, as unemployment has doubled, pay is cut and overall living standards fall from the high levels which brought South Korea well into the upper echelons of OECD per capita income tables. As a result, the unity and solidarity with which South Korea initially confronted the economic crisis when it broke last year, is fragmenting. While there is a widespread policy consensus on the need to push through restructuring, thereby turning this difficult period to long-term advantage, the political will to do so is seen to be slipping. It is not helped by opposition from the former governing Grand National Party, which still controls the parliament and has resisted such reforms as providing budgets for job training and unemployment insurance. This is a traumatic time for South Koreans, humiliated by their change of fortunes and shocked by the sudden loss of stature after a long period of strong economic development. Their success or failure in confronting and addressing these adversities will affect not only themselves, but also the rest of the Asian region and a wider world which has grown accustomed to their strength.