Tag Archives: chaebol

Snap South Korean presidential election points to tough Moon-Ahn race

South Korea’s snap presidential election in May now favors the progressive candidate, Moon Jae-in, but he is facing surprisingly strong opposition. (Facebook)

When Moon Jae-in (문재인) won his party’s nomination last Monday, news outlets across the globe immediately proclaimed that the progressive’s nomination all but assured Moon’s victory in the snap presidential election set to take place on May 9. 

Nevertheless, the next 27 days promise to be some of the most tumultuous in the history of South Korean democracy, with former president Park Geun-hye (박근혜) under arrest on bribery and other corruption charges and with US president Donald Trump’s administration taking an increasingly bellicose line over North Korea’s nuclear provocations. Park’s removal from office brought forward the presidential election previously scheduled for December.

Last week’s primaries among all of South Korea’s major parties have effectively settled the presidential field. Almost immediately, though, Moon’s opponents started lining up behind another progressive alternative — former software engineer and entrepreneur Ahn Cheol-soo (안철수), who kicked off his general election campaign by taking a ride on Seoul’s subways. The hint wasn’t subtle: Ahn is an outsider who understands the problems of everyday Koreans.

It set off an election dynamic that polls say, all of a sudden, is now too close to call.

Once Moon’s ally, former software businessman Ahn Cheol-soo is gaining support from many different corners of South Korean society, united solely by their mutual distrust for Moon. (Facebook)

The sudden Moon-Ahn horse race elevates a long-simmering rivalry that’s defined the South Korean opposition for the better part of the 2010s. Moon and Ahn both hold relatively left-wing views by the standards of South Korean politics. But Ahn is increasingly viewed as more pro-American, given Moon’s skepticism about the US-built Terminal High Altitude Area Defense (THAAD) anti-missile system that North Korea and China view as an American provocation. While both Moon and Ahn previously opposed THAAD, which could deploy within weeks, the two candidates are now voicing at least qualified support for its deployment if North Korea’s aggression continues. But Moon has warned that THAAD’s deployment should be halted if North Korea resumes negotiations and freezes its nuclear weapons program.

More broadly, South Korean business elites like that Ahn comes from an entrepreneurial background. Idealistic voters, meanwhile, consider Ahn an untainted maverick who can break the cycle of corruption that’s dogged several administrations from both the left and the right and the ‘chaebol’ conglomerates than dominate the South Korean economy. (Notably, Samsung CEO Jay Y. Lee (이재용) was arrested in February as a result of the wide-ranging corruption scandal that engulfed Park’s presidency, accused of paying up to $40 million in bribes to Park in exchange for favorable treatment for Samsung).

At a stunningly rapid clip, Ahn has defined himself as the outsider to Moon’s insider. In addition, with the Korean right in shambles after Park’s implosion, many conservative voters — for now at least — seem to prefer a strategic vote for Ahn instead of a more right-wing candidate. Continue reading Snap South Korean presidential election points to tough Moon-Ahn race

Park Geun-hye becomes South Korea’s first female president


Back in July, I suggested that  Park Geun-hye (박근혜) of the Saenuri Party (새누리당 or the ‘Saenuri-dang’, the New Frontier Party) was defying gravity in her race for South Korea’s presidency, and I listed five reasons why:

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  • She’d rebranded her party from the Grand National Party into the ‘New Frontier’ Party.
  • She then led the Saenuri Party to victory in elections for the National Assembly in April despite the unpopularity of her party’s incumbent president Lee Myung-bak (이명박).
  • Even six months ago, she had already co-opted the message of the center-left on ‘economic democratization,’ chaebol reform and income inequality.
  • South Korea’s progressive opposition was largely divided.
  • Mixed feelings (including some nostalgia among older voters) about her father’s authoritarian reign from 1961 to 1979 largely neutralized potentially controversial family ties.

By the time South Koreans went to the polls yesterday, all of those factors contributed to her victory.

She has defeated Moon Jae-in (문재인) of the Democratic United Party (민주통합당, or the ‘Minju Tonghap-dang’) with 51.6% of the vote to just 47.9% for Moon, ending what was always a very close race — albeit one where Park always seems to hold a slight edge.

As we look ahead, all of those factors should equally inform us as to what to expect from Park — the first woman to become South Korea’s president — and her incoming administration.

By rebranding her party as the ‘New Frontier’ Party — and making clear that the new frontier would not include Lee (who narrowly defeated Park for her party’s presidential nomination in 2007) — and then running against Lee’s record as much as against her opponent, she neutralized one of the most significant impediments to her candidacy.  She reinforced the split during the spring legislative campaign — and, by the way, she’ll enter the Blue House with a very friendly parliament as well.  Moon, had he won the election, would have been hampered by a hostile Saenuri majority, but Park will find a largely pliant National Assembly — Saenuri legislators know that they would not have that majority without Park.  So she’ll wield significant power as president in order to push through her campaign agenda.

That agenda, frankly, does not appear dissimilar to the agenda Moon promised.  While the policy details have been less than detailed, Park’s campaign emphasized traditionally liberal themes, and that moderate agenda certainly helped elect Park yesterday.  If Park wants to avoid the unpopularity of her predecessor, she’ll have to produce legislative accomplishments, not only on chaebol reform, but also find a way to reduce Korean income inequality and, ultimately, she’ll probably need to be lucky enough to have robust GDP growth.

On North Korea, too, both candidates agreed that the next president should be more conciliatory to North Korea than Lee’s administration, but they shied away from advocating a full return to the ‘Sunshine Policy’ of the late 1990s and 2000s that increasingly seemed to South Koreans like a series of handouts in exchange for further aggression from North Korea.  So under Park, South Korea will likely retain its firm approach to North Korea, but with relatively more carrots than sticks.

In terms of the geopolitics of East Asia, Park — who assumed the role of first lady during her father’s administration at age 22 when, in 1974, her mother was assassinated by North Koreans — will certainly be no shrinking violet (get set for five years of hearing the phrase ‘the Iron Lady of Asia’).

Indeed, it’s a crucial time for East Asia, given that King Jong-un has been in power for only a year, Xi Jinping (习近平) only last month took over as general secretary of the Chinese Communist  Party (中国共产党) and is set early next year to become the president of the People’s Republic of China, and the hawkish Shinzō Abe (安倍 晋三) only last Sunday won Japan’s parliamentary elections, returning him to power as prime minister.  Park’s immersion in Korean politics since the 1970s and her perceived toughness (she once returned to the campaign trail in 2006 just days after an assailant slashed her in the face with a knife) also likely contributed to her victory yesterday. Continue reading Park Geun-hye becomes South Korea’s first female president

South Korean presidential election features talk of chaebol reform from both sides


For South Korean economic policymakers, their worst nightmare lies just 400 miles away.

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After essentially four decades of massive growth (except for a blip following the 1997 Asian financial crisis), South Koreans worry that their hard-charging economy, which has propelled South Korea into the developed world, could end up like Japan’s — stuck in a lost decade (or two) of nearly zero-growth malaise.

While Shinzō Abe (安倍 晋三) will return as prime minister in an attempt to kickstart Japan’s economy with massive amounts of public spending after Sunday’s parliamentary elections in Japan, tomorrow’s South Korean presidential election has focused on economic issues that involving avoiding many of the mistakes that Japan made in the 1980s, with South Korean growth already slowing (it may be around 2% or 3% in 2012, historically very low for the Korean economy).

In particular, Japan’s economy in the 1980s relied heavily on keiretsu companies — the internationally known champions subsidized and coddled by the Japanese government.  South Korea, likewise, features many similar large government-championed conglomerates, known as chaebol in Korean.  The chaebol, chief among them globally recognized companies such as LG, Hyundai and Samsung, are highly centralized and still controlled in large part by the families that founded them in the mid-20th century.

But both major candidates — Park Geun-hye (박근혜) of the Saenuri Party (새누리당 or the ‘Saenuri-dang’, the New Frontier Party) and Moon Jae-in (문재인) of the Democratic United Party (민주통합당, or the ‘Minju Tonghap-dang’) — have advocated chaebol reform, often while simultaneously pledging to curb widening income inequality and expand ‘economic democratization,’ without really explaining how a more aggressive posture on chaebol reform would result in greater incomes.  It seems likelier that the widening income gap and relatively lower economic growth in South Korea has led many voters, especially small and mid-sized business owners, to look more disapprovingly on chaebol — in the same way small-business owners in the United States might scorn Wal-Mart and Amazon:

The chaebol touch almost every aspect of South Korean life. In the morning, Samsung Electronics salesperson Ellen Jeon leaves her home in Tower Palace, a complex in Seoul’s Gangnam district built by Samsung C&T Corp. She crosses the lobby to Starbucks, a franchise owned by a unit of retailer Shinsegae Group that’s run by Samsung Chairman Lee Kun Hee’s nephew. Wearing Tory Burch flats, bought at a Shinsegae department store, she carries her caramel macchiato to her Renault Samsung Motors SM5 sedan to drive to work.

Near her home is the Samsung Medical Center, where she bore her first son, a year after her wedding at the five-star Shilla Hotel, run by Chairman Lee’s eldest daughter. On her way to Samsung Digital City in the suburb of Suwon, she passes Shinsegae’s Jookjeon outlet, where her husband bought his first suit—a pinstripe from the Galaxy label of Cheil Industries: Lee’s second daughter is vice president. Naturally, Jeon and her husband both carry Samsung phones.

Regardless, it remains true that South Korea’s chaebol hold an outsized influence on the national economy — around 76.5% of GDP can be attributed to South Korea’s ten largest companies, and their leaders often play a cozy consultative role to Korean policymakers.  Incumbent president Lee Myung-bak (이명박), who remains relatively unpopular and tainted with corruption allegations, came to power in 2007 after a three-decade career at Hyundai, including as CEO of Hyundai Engineering and Construction, on a platform of business-friendly policy, not chaebol reform, and his promises of 7% growth from the trickle-down effects of a pro-business government have not come to fruition.

Former candidate, software entrepreneur Ahn Cheol-soo, took an even harsher line by promising to break up the conglomerates altogether.

Moon, in particular, has advocated reforming chaebol ownership to reduce the influence of the families that own them, reducing the family influence to that of a typical shareholder or top executive, and unwinding existing cross-shareholdings among the individual companies that comprise each of the chaebol.  But given that the National Assembly will still be controlled by Park’s Saenuri Party, it remains unclear whether Moon could push such a reform through South Korea’s parliament.

For her part, Park has discussed preventing the individual companies within each of the major chaebol from adding to their shareholdings in each other, though she wouldn’t go as far as Moon.  Park has also called for strengthening antitrust laws and increasing fines for violations of fair-trade laws.

But the surprising aspect of the debate is that South Korea has already taken aim at its chaebol — during and in the aftermath of the 1997 Asian financial crisis, when the chaebol, which already suffered greatly during that crisis after years of mismanagement and bloat, were found to have shoddy accounting practices and to have engaged in bribery and corruption of South Korean government officials.

Continue reading South Korean presidential election features talk of chaebol reform from both sides

Roh Moo-hyun haunts Moon’s candidacy in Korean presidential race


Although the conservative Park Geun-hye has had to fend off challenges tying her to the worst of massively unpopular incumbent Lee Myung-bak and her father, Park Chung-hee (South Korea’s autocratic ruler from 1961 to 1979), it’s another former South Korean president who may represent the largest millstone in the Dec. 19 presidential race.South Korea Flag Icon

Moon Jae-in, candidate of the Democratic United Party (민주통합당, or the ‘Minju Tonghap-dang’), and a former chief of staff to Roh, has essentially no political identity separate from Roh.  He’s inescapably the heir to Roh, for better and for worse — for Roh’s supporters, Moon is an experienced champion of the policies Roh pursued; for Roh’s detractors, of course, Moon represents a return to the perceived incompetence and disappointment with Roh’s administration.

Park has had her challenges as the candidate of the Saenuri Party (새누리당 or the ‘Saenuri-dang’), the New Frontier Party — and formerly the Grand National Party — the party to which Lee belongs, but voters don’t associate Park with Lee because Park comes from a different wing of the party, has a vastly different management style and background, and, above all, she has campaigned as much against her opponent, Moon, as she has against Lee.  If anything, voters (especially older voters) associate Park’s candidacy with her father, who gained power in a coup in 1961 and pulled South Korea’s economy into the developed world until his assassination in 1979.  Voters will recall that Park (the daughter) was essentially South Korea’s first lady from 1974 onwards, when her mother was also assassinated.  Despite the economic strides that South Korea made in the Park era, it made precious little progress in the area of political rights or democracy.

The campaign for human rights and a more democratic South Korea during the Park years is, in fact, the defining experience of both Roh and Moon — Roh’s emergence in South Korean politics coincided with the rise of the ‘386 Generation,’ a new generation of political leadership educated in the 1960s that came to politics demanding for greater freedoms and democracy.  Moon, a human rights lawyer, was actually imprisoned in the 1970s for his activist efforts against the Park regime.

Fundamentally, the ties that bound Moon to Roh were forged during that fight — against Park’s father.  Park (the daughter) has recently apologized during the campaign for the abuses of her father’s administration, although her father’s legacy probably helps Park among many Koreans nostalgic for what seems to them a golden era of growth and prosperity.

That makes this year’s South Korean election — especially with the withdrawal of popular software entrepreneur Ahn Cheol-soo from the race in late November — very much a prototypical ideological fight between the two major forces in South Korean political life for nearly half a century.

As such, it’s worth reflecting on Roh’s administration, Moon’s role in Roh’s administration, and the scandal that led to Roh taking his own life by jumping off a cliff in May 2009, which tragically elevated Moon in the public eye.

Roh’s suicide came after what many believed were politically motivated allegations of bribery surrounding his family and associates, but those allegations never really touched Moon.  Nonetheless, his suicide elevated the pro-Roh faction within South Korea’s progressive scene, including Moon (shown above at Roh’s funeral), who served as counsel to Roh during the post-presidential investigation and who organized Roh’s funeral.


Roh came to office as a bit of an outsider — he served briefly as minister of maritime affairs and fisheries under Kim Dae-jung, hardly the best profile for a 2002 presidential run.  But his conciliatory approach to North Korea and his calls for a more equal relationship with the United States, especially following the acquittal of two American soldiers who hit and killed two teenaged Korean girls with an armored vehicle in an accident in June 2002.

Roh continued Kim’s ‘Sunshine Policy’ toward North Korea to somewhat less than great effect, and turned out to be more conciliatory to the United States than many expected back in 2002.

But the defining aspect of Roh’s presidency was the virulent opposition he encountered from conservatives.   Continue reading Roh Moo-hyun haunts Moon’s candidacy in Korean presidential race

The incredibly shrinking Lee Myung-bak

South Korea’s presidential elections never feature incumbents — the president is limited to a single five-year term — but that doesn’t mean incumbents don’t feature prominently in presidential elections.

In 2007, Chung Dong-young suffered from his ties to president Roh Moo-hyun, under whose administration Chung served as unification minister, and to some degree, Moon Jae-in, the presidential candidate of the liberal Democratic United Party (민주통합당, or the ‘Minju Tonghap-dang’) and Roh’s former chief of staff.

But given that incumbent president Lee Myung-bak, who will leave office as one of South Korea’s most unpopular presidents, garners approval ratings of around 20%, you’d expect that the candidate of Lee’s Saenuri Party (새누리당 or the ‘Saenuri-dang’), formerly the Grand National Party, would be suffering even more, right?

Wrong.  In South Korea’s presidential race this year, one of the reasons that Park Geun-hye has consistently held a lead over Moon has been her successful distancing from the Lee administration (although that lead is narrowing fast, especially after Park made a gaffe in the second presidential debate Monday indicating she wanted to ‘invigorate’ the underground economy).

Moon has consistently attacked Park for her party’s economic record, but the charges have not (so far) erased Moon’s deficit, even after posters surfaced trying to tie the two together as ‘Lee Myung Park Geun-hye.’

If anything, Park has been more successful by hammering away at lingering doubt about the Roh administration and Moon’s ties to it as Roh’s chief of staff.

That’s in part because while Park has attacked Roh’s administration, she’s also shown no compunction in attacking Lee’s record as well:

“The Roh Moo-hyun government wasted a period of prosperity in the world economy by indulging in ideological debates and power struggles, leading to the erosion in working-class living standards. The Lee Myung-bak government put growth before everything and failed to make lives better. I will not be a leader who will repeat the mistakes of previous governments,” Park said at a rally in Seogwipo, Jeju Island.

During the campaign, Park has attacked Lee’s administration for having failed middle class people and for exacerbating income inequality — an issue that both Park and Moon had pledged to make a top priority if elected.  Despite the rhetoric, there’s really no indication that Park’s administration would mark a vast policy difference from Lee’s administration.  If anything, Korean conservatives are incredibly united behind Park’s candidacy — more so than at any other time since the 1987 election.

But Park has long been known as an intraparty rival of Lee — no one would ever accuse Park of harboring secret affection for Lee or his accomplishments. Continue reading The incredibly shrinking Lee Myung-bak

Ahn’s exit clears way for competitive Moon presidential campaign against Park in South Korea

Last Friday, independent presidential candidate Ahn Cheol-soo dropped out of the South Korean presidential race.

Without a doubt, his decision has transformed the race from a three-way contest between one conservative and two liberals, which was destined to favor the conservative candidate, Park Geen-hye of the Saenuri Party (새누리당 or the ‘Saenuri-dang’) into a direct showdown between the two dominant brands of politics in South Korea over the past half-century.

Before his withdrawal, Ahn was splitting the support of liberal voters with Moon Jae-in of the Democratic United Party (민주통합당, or the ‘Minju Tonghap-dang’).

Now Moon and Park are in a much closer race, although the latest polls give Park a slight edge (the latest Realmeter poll from Nov. 30 shows Park with 49.9% support and Moon with just 44.2%).  Polls routinely showed that before his withdrawal, Ahn, if anything, was the stronger candidate against Park (not Moon).

It’s still unclear why Ahn dropped out so suddenly — in an interview last week prior to his withdrawal, he indicated he had no intentions of bowing out.  But by falling on his own sword, Ahn has made himself even more popular by apparently putting the cause of defeating Park ahead of his own personal ambitions.  Now in the position of a potential kingmaker, Ahn can trade his vigorous support for Moon (Ahn has already somewhat gracefully called on his supporters to vote for Moon) for a role in a potential Moon administration, which could give Ahn governmental experience in advance of the 2017 election.

For such a liberal candidate, it’s a little shocking to see polls that show only 50.7% of Ahn’s former backers are committed to Moon with less than three weeks to go until the election, even though over 70% of Ahn’s supporters want to see a change in administration from the current Saenuri Party.  Fully 26.4% of Ahn backers apparently support Park and 21.9% remain undecided — Moon cannot win unless he (with or without Ahn’s help) can migrate more of Ahn’s former supporters into his own camp.

Ahn’s popularity has been somewhat of a phenomenon in South Korea since he first flirted with running in Seoul’s mayoral race in October 2011 — although he failed to enter that race, which polls showed he could have won, he backed Park Won-soon, another liberal independent, who ultimately won the Seoul election.  Ahn spent the better part of 2012 teasing a presidential campaign that he announced only in September of this year.

Ahn, himself, is a businessman by background — he founded AhnLab, Inc. in March 1995 (think of it as South Korea’s version of McAfee or any other anti-virus software company).  Until he launched his now-aborted presidential campaign, Ahn was a graduate school dean at Seoul National University.   Continue reading Ahn’s exit clears way for competitive Moon presidential campaign against Park in South Korea

Park’s apology marks milestone in Korean presidential race

It’s hard to understate just how important (if inevitable) it was for South Korean presidential candidate Park Geun-hye to make the following statement earlier this week:

“Behind our history of miraculous growth, there were the sacrifices of workers who suffered under harsh working environments, and behind our guarding of national security against North Korea there were violations of human rights by public authorities.”

“I once again offer my sincere apologies to the people who suffered wounds and hardship as a result, and to their family members.”

Those words come in relation to the legacy of Park’s father, Park Chung-hee, who took power in a coup in 1961 and held power until his assassination in 1979.  Park Chung-hee is credited with lifting South Korea out of poverty in the wake of the Korean War and transforming the South Korean economy into one of the most efficient and developed in Asia.  The South Korean economy is today one of the world’s most productive and developed, and it’s certain that Park Chung-hee’s administration deserves credit for that.

But his legacy remains tarnished by authoritarian rule that did not tolerate free speech or dissent of any kind.  His regime engaged in political arrests and torture, and his rule morphed into a dictatorship despite promises of making South Korea more democratic.  South Koreans, to this day, have incredibly mixed feelings about Park Chung-hee.

As such, the legacy of Park Chung-hee is invariably at the heart of his daughter’s campaign — when Park Guen-hye’s mother was assassinated in 1974, Park Guen-hye essentially took on the role of first lady in lieu of her late mother.  Indeed, much of her success comes from a sense of nostalgia among those who see the 1960s and 1970s as a time of unparalleled growth for South Korea.  There’s no question of South Korea turning back from democracy, which has been entrenched in South Korea since the 1980s, but there is a sense that South Korean voters have wanted Park Guen-hye to acknowledge and transcend the darker aspects of Park Chung-hee’s legacy.

In the past, as recently as earlier this month, Park Geun-hye has been both dismissive and defensive over the less noble aspects of her father’s regime.  In making the apology, Park Geun-hye, also showed a rare emotional side:

“I’m sure all of you know how difficult it is in this country for a child to judge his or her parents, and especially to make a public statement about their misdeeds. I do not think that the people of Korea really want me, a daughter, to spit on her father’s grave,” she said.

East Asian politics is not known for its “I feel your pain” politicking, but Park Guen-hye has a particularly formal and stiff image even by East Asian standards. Continue reading Park’s apology marks milestone in Korean presidential race

Moon, Ahn candidacies officially set South Korean presidential field

Moon Jae-in (pictured above, top), a former chief of staff to president Roh Moo-hyun, won the presidential nomination on Sunday of the main opposition party in South Korea, the Democratic United Party (민주통합당, or the ‘Minju Tonghap-dang’), and today, Ahn Cheol-soo (pictured above, below), a popular doctor-turned-entrepreneur launched an independent bid for the presidency.

Both are, somewhat, novices to electoral politics in South Korea.  Moon is the former chief of staff to the late former president, Roh Moo-hyun, and Ahn is a complete outsider to South Korean politics.

Both pull support from the same pool of generally liberal and moderate voters — meaning that if neither drops out before the December 19 election, neither currently would stand much of a chance against the frontrunner, Park Geun-hye of the Saenuri Party (새누리당 or the ‘Saenuri-dang’ / New Frontier Party).

The essential fact of the South Korean presidential race is that if neither Moon nor Ahn steps down in favor of the other, Park will win the election.  Every poll, including the latest one from Real Meter, conducted Sept. 17-18, demonstrates this glaring threshold truth: Park leads with around 39%, Moon follows with 26% and Ahn wins 22.5%.  Although over the course of the month, Moon has moved from 15% and third place (drawing support from both Park and Ahn) into a stronger second place, arithmetic is arithmetic.  Moon and Ahn may seesaw as the favorite challenger to Park, but Moon, having easily won DUP’s primary, now faces another sort of primary — with Ahn — to consolidate the liberal and moderate vote.

Furthermore, even if one candidate bows out soon enough to allow for a unified challenge to Park, the road that either Moon or Ahn faces ahead is tricky.

Even in a one-on-one race with Park remains competitive against either Moon or Ahn.  So the longer it takes for either Moon or Ahn to back down as the chief alternative to Park means that the race will focus less on Park and more on the Moon vs. Ahn aspect.

Park, as I’ve written before, is virtually defying gravity in that she’s run nearly a flawless campaign — after rebranding her party from the ‘Grand National Party’ to the Saenuri Party late last year, she led her party from a bit behind to win South Korea’s parliamentary elections in April, notwithstanding the incredible unpopularity of the incumbent, Lee Myung-bak (who Park challenged for the then-GNP presidential nomination in 2006).  Since then, she’s essentially been running victory laps through South Korea, and co-opting the message of the opposition by championing issues that are the traditional turf of the left in South Korea — strengthening the social welfare system and reducing income inequality.  Until either Moon or Ahn drops out, the storyline will be Moon and Ahn, while Park glides, rather presidentially, above the din. Continue reading Moon, Ahn candidacies officially set South Korean presidential field