South Korean President Moon Jae-in has not been content to sit and watch the feud between the US and North Korea escalate, but his own efforts to defuse the tensions distract from domestic troubles that require attention, namely reform of his country’s massive conglomerates. Photo: Reuters
Amid all the Kim and Trump chest-thumping, Moon’s best chance of success is to rein in South Korean conglomerates
William Pesek says that, with the actions of the North Korean and US leaders beyond his control, Moon Jae-in should invest his political capital in reforming companies that dominate South Korea
A world leader with one 800-pound gorilla faces enough of a challenge, but three? Welcome to hell in South Korea, as novice President Moon Jae-in contends with Kim Jong-un, Donald Trump and the infamously unruly Korea Inc.
North Korea’s nuclear-armed brute turned charmer on January 1. His regime in Pyongyang put aside its characteristic bluster, threw tarps over the missiles and tiptoed toward talks with Seoul. Kim even plans to send a team to next month’s Pyeongchang Olympics in the South. Anyone taking bets on how long it all lasts?
Even if Kim were serious about behaving, Primate No 2 is sure to pull him back into the fray. Even as Pyongyang and Seoul swap olive branches, the White House is mulling a “bloody nose” strategy, The Wall Street Journal reported on January 9, with Trump fantasising that he can hit North Korea militarily in some way without igniting all-out war.
Then there’s the corporate jungle that not only surrounds Moon but will arguably mean the most to his legacy. South Korea’s economic habitat is dominated by the chaebol, a handful of family-owned conglomerates that suck up the nation’s innovative oxygen. Moon’s immediate predecessor promised to tame them, only to end up in jail for colluding with them.
Any of these beastly challenges would be trial enough for a leader of just 247 days’ experience. All three agitating for his attention at once makes Moon’s presidency South Korea’s most pivotal in two decades.
Kim’s sudden overture was indeed surprising. Not as shocking as the jaw-dropping advances in his nuclear-weapons programme over the past 18 months – progress neither Seoul nor Washington saw coming – but who would have guessed Kim would be sending athletes to the Pyeongchang Games? Moon is right to renew dialogue, but the real game will be played by Kim and Trump.
“In the animal kingdom,” wrote Hungarian-American psychiatrist Thomas Szasz, “the rule is, eat or be eaten. In the human kingdom, define or be defined.” That encapsulates Moon’s plight as Kim and Trump rattle cages.
North Korea to send athletes to Winter Olympics in South Korea
The real stumbling block is the starting point for negotiations on which both the United States and Japan insist: Kim must give up his nukes. That, of course, is the last thing Pyongyang would do. The Kim dynasty saw, and internalised, what happened after Libya’s Muammar Gaddafi and Iraq’s Saddam Hussein forwent nuclear deterrence: regime change and death.
Trump, meanwhile, is desperate for a win on the international stage. The scandal-plagued leader is also keen to change the narrative away from Russia investigations and his mental state. Some kind of pre-emptive attack on Kim’s missile silos, or shooting down Kim’s next rocket test, can’t be ruled out. That would shake markets and send Moon’s “sunshine policy” designs back to the drawing board.
North Korea's leader Kim Jong-un inspects the newly developed Hwasong-15 ballistic rocket in this photo released by North Korea's Korean Central News Agency. Photo: Reuters/KCNA
That’s why taming the chaebol may hold the most promise for Moon’s administration. It’s the one thing he can control – and define. Just like his predecessor, Park Geun-hye, Moon was elected essentially to turn Asia’s fourth-largest economy upside down.
Korea rose from the ashes of war on the backs of a handful of giants we know today as Samsung, Hyundai, LG and Daewoo. But their reach and influence grew too big. Team Park, for example, got caught shaking down Korea Inc. allegedly for about US$70 million, a scandal that put Samsung leader Lee Jae-yong in jail. Last month, Moon made a promising down payment with a contrarian corporate tax hike to 25 per cent from 22 per cent for Korea’s biggest companies. Much bolder action is needed, though. Moon must tighten anti-monopoly laws and increase enforcement efforts to level the playing field. Tax incentives and regulatory tweaks are needed to catalyse a startup boom. Moon’s team should tax conglomerates hording cash that can be better used to fatten paychecks and finance new industries.
It also should deepen safety nets to encourage greater risk-taking among entrepreneurs. The idea is to instil a survival of the fittest vibe. Getting Kim and Trump, two gorillas who live by their own sets of rules, to coexist is beyond Moon’s influence. But raising living standards for 50 million South Koreans would make the economy a more dominant species globally – and Moon’s tenure a roaring success.
Lee Jae-yong, vice chairman of Samsung Electronics arrives for his trial at the Seoul Central District Court in Seoul on August 7, 2017. Lee was sentenced to five years in prison in late August for offering bribes to South Korea’s disgraced former president, Park Geun-hye, among other offences. Photo: Reuters
