Tag Archive | "Moon Jae-In"

Korea’s Ambitious Smart Water Grid Initiative

By Hwan Kang

The word “Smart Grid” became popularized when the energy industry thought applying sensors and having comprehensive control over the whole cycle of generating and consuming electricity was a good idea. Some people thought it would be even better if they could do the same with water, coining the term, “Smart Water Grid (SWG).” South Korea is one of the pioneers in this area as it tries to combat the country’s chronic water shortage stress.

South Korea the “Water-Stressed” Nation

South Korea experiences extreme cases of drought and flood each year, which means that the country has too much water and too little water at the same time. More than half of the total precipitation is concentrated during the summer while it becomes dry rest of the year. The country also experiences wide variance in precipitation by the region as well. Some provinces face water shortages even during the monsoon season because the rain comes down in only concentrated areas. What is worse is that yearly variance in precipitation is also big, ranging from 950 mm per year to 1600 mm per year. Such wide unpredictability forces South Korea to formulate a better water management system.

In terms of consumption, South Korea has been facing an increase in water usage along with economic growth over the years, while the available water source remained pretty much steady. Such a gap in supply and demand of water drove the country to deplete its water sources, with 33 percent of total available water presumed to be depleted according to OECD research. Such a state is represented by high level of water stress, placing Korea 50th out of 167 countries in terms of Water Stress Index, which is just behind severely stressed countries in Middle East and Southeast Asia.

Smart Water Management Initiative by K-water

Instead of staying stressed out about water withdrawal, Korea decided to use internet technology as a solution to build its own SWG. Dubbed as the “Smart Water Management Initiative (SWMI),” the Korean Water Resources Corporation (K-water) revealed its ambitious plan to use the ICT (Information & Communications Technologies) to control the whole cycle of water consumption. Similar to smart electricity grid, the initiative aims to put sensors on every part of the water distribution process to keep track of it on a real-time basis and manage facilities to efficiently recycle the water and re-distribute it.

The purposes of building SWG are to maximize the limited water resources and deal with uncertainties that arise with subsequent draught and flood. K-water expects that the successful operation of the SWG will eventually reduce the need to construct additional dams, leading to much cheaper solutions. The system also plans to communicate with the consumers through an online application by showing them real time information on the quality of water they use and provide assistance if they need it.

The SWG has gone through a trial period in selected regions such as Paju, where it has brought up the percentage of residents who drink tap water to 19.3 percent from 1 percent, improving confidence in the safety of the water, with an 80.7 percent satisfaction rate. In case of Seosan, a region which suffered from water leakage, the system was able to bring up the flow rate up to 90 percent from 60 percent, saving a significant amount of water and money. SWG is widely expanding its area with applications pending for Naju, the Korean Airforce, and Sejong city.

Growing Global Smart Water Management Market and Pioneering Korea

Water management is now considered as a prospective market with water shortages looming as a major problem in the future. According to the OECD, the water management for urban areas will become increasingly important because 86 percent of the OECD population will live in cities, while demand for water will increase by 55 percent by 2050. What is worse is that urban areas are more susceptible to pollution as well as environmental disasters, which calls for preventative water management plans. According to Ecolab, water management is also becoming an important part of corporate strategies by the companies, too. As the cost of acquiring necessary water rises, they are looking for ways to stably supply water for their industries. Such combined demand is becoming more realistic as industries are investing more in the smart water management market, pushing the market to grow on the average of 17.2 percent every year.

Amid all these changes, it is not surprising that Korea is not the only one trying to develop SWG. In fact, United States was the first country to coin the term with the launch of the Smart Water Grid Initiative back in 2009. Germany, France, Israel and Singapore are also developing their own methods of managing water with ICT either from their need to control water related disasters or recycle it for re-use. IBM is leading the management market as a private company by providing software called IBM Intelligent Water for rivers such as the Hudson River and the Amazon River and in countries such as Amsterdam and Ireland.

Korea is striving to acquire a position in the global market and is in fact showing some progress. Along with its future plans to expand its SWG program domestically, it has signed several memorandums of understanding (MOU) with the Asian Development Bank (ADB), Jordan and Vietnam, where they all suffer from severe water shortages. In the case of the ADB, K-water has promised to send its SWG experts to four South Asian countries and provide the necessary education and assistance to fix the developing nations’ inefficient water supply systems. For Jordan, on the other hand, the SWG developed by K-water will consist of desalination plants that will filter the sea water from the Dead Sea. Lastly, the MOU with Vietnam is about managing the drinking water in the country which is a fast growing market in the region. In addition to various forms of SWG cooperation, Korea is planning to hold the 2017 Smart Water Grid International Conference, which has been held annually in Incheon.

Problems

Although the Korean Smart water management initiative looks promising, it is not without its problems. The OECD report on enhancing water use efficiency in Korea lists the problems comprehensively. A major flaw in these endeavors is the funds for these projects. Currently, K-water depends heavily on government funding rather than its own revenue for their operation, which was half of its total spending of 17.9 trillion Korean won (15.9 billion USD) in 2013. The report also points out that the K-water spends less efforts on improving the water distribution efficiency on the demand side by adjusting the fee for the consumers.

K-water also needs to work harder to raise the awareness of its initiative, both with the public and elites. K-water may have announced MOUs with other countries in the media, but it is not enough to demonstrate to the public the potential and how successful SWG development is. Fora project requiring significant investments, there is little information on the progress of the initiative other than from K-water sites and foreign reports written in English. In terms of elites or academics who want to develop the SWG further in Korea, there are academic societies dedicated to researching the SWG in Korea specifically. However, they do not seem to be updating publications or events in a timely manner to support interest. For K-water to really go for the global market it needs to work on how to build domestic support, so it will have a firm footing from which to pursue the initiative with stable funding and acknowledgement.

Hwan Kang is currently an Intern at the Korea Economic Institute of America as part of the Asan Academy Fellowship Program. He is also a student of Seoul National University in South Korea. The views expressed here are the author’s alone.

Image from Changjin Lee’s photostream on flickr Creative Commons.

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President Moon’s Commitment to Young People in South Korea

By Donald Manzullo

Part of President Moon’s plans for re-invigorating his country’s economy is to address the huge problem of unemployment and underemployment, especially among Korea’s youth.

Over 11 percent of those between 15 and 29 are not employed, a figure that is almost three times the rate of the jobless. Koreans have long had a commitment to higher education, resulting in 80% of high school graduates going on to college.  Each year, about 500,000 young people go into the job market, with 60% of them holding college degrees, but there are permanent jobs for only about 200,000, resulting in highly educated young people taking full and part time jobs at the low end of the wage scale.  With chebols actually hiring less, this annual problem is even more profound.

As a candidate, President Moon received enormous support from voters within this age group (the voting age is 19 in Korea), young people trying to find meaningful jobs in an increasingly difficult situation. In June, President Moon said, “If we leave our current jobless situation as is, there are concerns it may later return to us as an economic crisis equaling a national catastrophe,” in asking for an extra budget to up social welfare subsidies and create more jobs.

Moon’s goal is to add over 800,000 public sector jobs, pass a stimulus bill and increase the minimum wage. “We have to shut down the cycle of growth without employment. We need an economic paradigm shift from the idea that jobs are created as the result of growth to the idea that growth occurs when jobs increase,’” he said, Forbes citing local press. “Moon believes that as more jobs are created, household income will increase, which would spur consumption and raise company earnings — eventually creating more jobs. It stands in contrast to his two predecessors who argued that companies must grow first for jobs to be created.”

Moon’s challenges are daunting, but he’s reaching in several directions, especially in light of the unachieved goals by his two predecessors in office.

He’s created a new Ministery of SME’s and Start Ups, and nominated former Democratic Assemblyman Hong Jong-haak to be its first head. Hong was the former policy director at the Citizens Coalition for Economic Justice (CCEJ), a Korean public policy organization founded in 1989 that is involved in all types of grass roots issues covering subjects like banking, local autonomy, finance, taxation, and welfare.  The emphasis of the organization is “ordinary citizens” as leaders, trying to find alternatives in a social justice setting.  President Moon is entrusting Dr. Hong to help create 160,000 new jobs through executing his policy standards for re-invigorating SME’s and new start ups.  Elainae Ramirez, a contributor to Forbes says Moon has five pillars in this aggressive agenda: easier and more funding for start ups, acknowledging failing in business is not the end of the world, encouraging large companies to help smaller companies and making it easier to exit as a small business into a larger enterprise,

President Moon’s challenges are enormous, and his commitment to young people to create a better future in Korea has taken on some very interesting philosophies and paths.  He came into office at a difficult time, and we hope his energy continues in succeeding to resolve, at least in part, some of the problems impacting Korea’s youth.

Donald Manzullo is the President and CEO of the Korea Economic Institute of America (KEI).  He was a member of the US Congress from 1993-2013 and served as Chairman of the Small Business Committee and Chairman of Foreign Affairs Subcommittee on Asia and the Pacific.

Photo from the Republic of Korea’s photostream on flickr Creative Commons.

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U.S.-Korea Relations: Don’t Drive a Wedge

By Mark Tokola

There is a small but growing body of commentary arguing that Washington and Seoul are drifting apart on North Korea policy.  At the headline level, there clearly is a difference in tone between President Trump’s tough rhetoric and President Moon Jae-in’s insistence that the only acceptable resolution to the North Korean nuclear issue is a peaceful one.  Extrapolating from this, commentators have praised or condemned Donald Trump for upping the stakes on armed conflict on the Korean Peninsula; and have praised or condemned Moon Jae-in for putting a premium on peaceful engagement.  Trump has become either a “decisive leader” or a “war monger,” and Moon either a “man of peace” or an “appeaser.”  There are significant dangers to letting these caricatures take hold.  One of Kim Jong-un’s dreams would be for a rift to develop between the United States and South Korea.  It should be one of the last things we would want.

It would be untrue to say that rhetoric doesn’t matter.  It certainly does matter as a signal of intentions.  However, policy doesn’t only consist of rhetoric.  Look more closely at what the Trump and Moon Administrations have said and done in regard to North Korea.  Both have insisted that their goal is denuclearization.  Both have said that they do not seek regime change but rather a change in North Korean behavior.  Both have said that they seek a peaceful resolution of the crisis.  Both have emphasized the important role China should play in restraining North Korean behavior.

Even in the details of their policies, President Moon and President Trump have agreed: (1) to deploy THAAD in the face of public protests in South Korea; and, (2) contrary to the desires of pro-engagement voices in both the United States and in South Korea, they have both rejected the Chinese proposal of a “dual freeze” to halt U.S.-ROK military exercises in purported exchange for a North Korean testing freeze.  Moon Jae-in has been outspoken that North Korean nuclear and missile tests are unacceptable.  Like President Trump, President Moon has warned North Korea that an attack on his country would be met with an overwhelming military response.

Moon Jae-in’s policy towards North Korea does differ from that of his conservative predecessors Park Geun-hye and Lee Myung-bak.  He places more emphasis on unification as a long-term process of integration.  The border between the two states would gradually blur as the systems merged through increased economic cooperation and people-to-people ties — inevitably but not hurriedly along democratic and free market lines.  His conservative predecessors placed more emphasis on unification taking place in the nearer term, and on the need to prepare for a single, unified state.  There is not a vast different between Moon Jae-in’s vision of North-South integration and Park Geun-hye’s early policy of “Trustpolitik” – which is yet another reason for Americans not to jump to conclusions about Moon being ‘soft’ on North Korea.

The differences between the Korean progressives and conservatives are not ones that should roil the U.S.-ROK alliance.  The U.S. dealt successfully in the past with progressive South Korean administrations.  No South Korean political leader of note believes that South Korea would benefit from the opening of a gap between the U.S. and South Korea.  There is widespread support for the alliance among the South Korean people and for a U.S. military presence in Korea. For the United States’ part, far from insisting that South Korea not deal with North Korea, long-standing U.S. policy has been to tell Pyongyang that they must deal with South Korea.

The real mystery is why North Korea has not bothered to attempt to drive a wedge between Seoul and Washington.  Kim Jong-un could easily do so by responding to President Moon’s attempts to engage in ways that could complicate the alliance.  Kim Jong-un could offer to reopen the Kaesong Industrial Complex on South Korea’s terms, or could invite President Moon to Pyongyang for a summit, or could offer peace and arms control talks on the condition that U.S. forces be reduced or removed from South Korea.  Instead, Kim Jong-un has not even bothered to reply to South Korean initiatives to engage.  Furthermore, Kim Jong-un has said that Moon Jae-in is nothing more than a puppet of the U.S. and may be “even worse than his predecessors.”  Kim Jong-un may not be trying to split the alliance because he has not seen an opening to do so – yet.

Two reasonable, basic principles for the U.S. in dealing with North Korea are: first, do nothing that damages the U.S.-ROK alliance; and second, do nothing that strengthens Kim Jong-un’s position.  Putting Donald Trump and Moon Jae-in into opposing camps unnecessarily does both.

Mark Tokola is the Vice President of the Korea Economic Institute of America. The views expressed here are his own.

Photo from Aram Kudurshian’s photostream on flickr Creative Commons.

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Moon Jae-in Takes a Different Path to Change in South Korea

By Hwan Kang

When Moon Jae-in was elected after former President Park Geun-hye was impeached, Koreans expected major policy makeovers. Indeed, the Moon Administration is trying to meet expectations by addressing some of Korea’s long lasting problems by announcing progressive measures such as an increase in the minimum wage and regulating the real estate market. However, Moon is also showing he is different from other politicians not by tearing apart Park Geun-hye’s legacy entirely, as some other progressive politicians have promised, but rather by utilizing part of it to his advantage.

One of former President Park’s main priorities was her “Creative Economy” plan, which aimed to promote economic growth and create jobs by fostering imagination, creativity and technology. This was the basis for hosting many startup contests and funding new startup centers that were supposed to inspire young minds to create new businesses. However, not only did the “Creative Economy” turn out to be a major flop with no definite results, it became a center of many embezzlement and bribery allegations in relation to Choi Soon-sil and her co-conspirators. The scandal also left the Korean public with a very bad impression of startups, causing many startup centers to face funding cuts and endangering new ventures.

In his 5-year policy roadmap, which was announced last July, Moon promised to continue the governmental support for startups despite the bad publicity, while promising a thorough investigation into allegations against the previous administration. He is planning to revamp government support for startups to boost the economy and create jobs in preparation for the “4th industrial revolution.” He even showed that he is going to prioritize startups by changing the name of the ministry charged with handling small business issues from the “Ministry of SMEs” to the “Ministry of SMEs and Startups (MSS).” The words may have changed, but the core startup policy remains pretty much the same as the “Creative Economy.”

Similar to Google or Paypal, it was startups such as Naver, Kakao, and numerous game companies that became surprising contenders against the chaebol conglomerates, always pushing the market to make way for new technology that the chaebols have overlooked. However, because the chaebols were so deeply rooted in the Korean market, SMEs and startups usually did not have a chance to grow into larger businesses themselves. Instead, they opted for big buyouts by the conglomerates, which in turn benefited huge companies even more. The reason the “Creative Economy” became a huge disappointment was that people thought it would finally be a big break for startups, many of which just want to continue developing what they have created. To those people who worried the new government would abandon the venture sector altogether, Moon’s plan may sound more refreshing than making any other changes.

Another policy that has remained steady through the transition between administrations has been the issue of the Terminal High-Altitude Aerial Defense (THAAD) system. Originally, the THAAD deployment created a significant amount of controversy, as it was pushed through by the Park administration without much open debate. It caused an uproar from South Koreans who believed there was some sort of sketchy arrangement behind the deployment because it happened to coincide with the Choi Soon-sil scandal. Additionally, concerns about possible electromagnetic wave pollution near the deployment site, on top of severe economic retaliation from China, also added to the growing anxiety. Each presidential candidate in the May election after Park’s impeachment put forward different positions on the deployment of THAAD, with progressive parties mostly leaning toward cancelling the plan.

Moon, who avoided giving a definite answer to the THAAD problem for a while, eventually decided to proceed with the “temporary deployment” this September and put an end to the indefinite delay. Just as could be expected, this decision was met with variety of mixed emotions from the South Korean public. Some from the progressive side, such as the Justice Party, criticized Moon for his apparent breach of trust, saying the Democratic Party had switched sides. According to Gallup Korea, the approval rate for the President took a slight hit, decreasing from near 80% to 70%, with his disapproval rate rising slightly as well after the announcement.

However, considering that the percentage of people who agreed to the deployment has remained steady within the range of 50%~57% dating from when Park announced the plan in July 2016, to two months into Moon administration in July 2017, one could guess that it was not the deployment itself that people wanted to change in general. Rather, their problem was with how the government handled the whole ordeal. This is a main point of contrast between Park and Moon – the former made little room for talk with the people while Moon at least took the time to consider an environmental test before making a decision. This becomes more evident when Gallup asked people what they thought about Moon’s decision to temporarily deploy four THAAD launchers –  72% replied it was the “right choice,” while 14% thought it was a “bad choice”.

South Koreans wanted change from the status quo and they picked the candidate who promised to deliver it, but the game is still far from over. Change can mean many things, from a complete reversal to minor alterations of existing policies. The Moon Administration is still in its early days and will need to decide what kind of changes would best benefit Korea. Koreans should also keep tabs on where the government is going so the country can head for the direction that people had intended when they impeached the last president.

Hwan Kang is currently an Intern at the Korea Economic Institute of America as part of the Asan Academy Fellowship Program. He is also a student of Seoul National University in South Korea. The views expressed here are the author’s alone.

Photo from the Republic of Korea’s photostream on flickr Creative Commons.

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South Korean President Moon Jae-In and French President Charles de Gaulle, both 360 presidents

Les Présidents: Moon Jae-in, Charles de Gaulle, and the 360 Presidency

By Mark Tokola

Historical analogies are fraught. Things never happen exactly the same way twice, and assuming they do can be misleading.  Nevertheless, historical parallels can offer useful perspectives.  For example, an advisor to South Korean President Moon Jae-in who recently visited Washington remarked that one element of President Moon’s philosophy for South Korea was a “360 degree defense.”  This sounds commonsensical; nations prudently should be prepared to defend themselves against potential threats coming from any direction.  But, for those old enough to remember, it also pushed the memory button of French President Charles de Gaulle’s January 1968 announcement that France would pursue a policy of “defense tous azimuts,” or all-around defense. The parallels between Moon Jae-in and Charles de Gaulle do not stop there.

Charles de Gaulle always had an uneasy relationship with the United States. On one hand, President de Gaulle withdrew France from NATO and obstructed European integration.  On the other, he was the U.S.’ strongest ally during the Cuban Missile Crisis, accurately predicted German unification and the fall of the Soviet Union, and presided over an unparalleled period of French economic growth.  Presidents Kennedy and Nixon both held de Gaulle in high regard.  He has topped polls as “the greatest Frenchman of all time.”  (One assumes Napoleon did not earn the accolade because of being dictatorial and, in the end, losing.)  The lesson of the comparison between de Gaulle and Moon may be that it is possible, perhaps even advantageous, for the United States to have an ally with which it sometimes disagrees.

One contextual parallel between the two presidents is that Moon and de Gaulle both came to power following a domestic political crisis. The collapse of the ineffective French Fourth Republic in 1958 was followed by the de Gaulle presidency and the founding of the Fifth Republic.  Charles de Gaulle promised, and delivered, constitutional reforms which have endured.  Moon Jae-in similarly has taken power following a crisis of governance and has promised constitutional reform.

Charles de Gaulle generally is perceived as a conservative, but on the economic front he favored state intervention in the economy, including a move to rein in the largest French companies by requiring that they share profits with their workers.  By 1964, France had overtaken the UK economically for the first time in modern history.  In a similar vein, Moon Jae-in has promised government action to boost economic performance, and his attitude toward Korea’s largest corporations, like de Gaulle’s, is that they should contribute more to the well-being of the citizenry.

But it is in the foreign policy arena that the comparison might be most instructive.  De Gaulle believed that the Soviet Union posed a threat to Europe, but also believed that it was necessary to engage with the Soviets as well.  He traveled to the Soviet Union in 1964 in an early attempt at détente, all the while believing that the Soviet system had no future.  De Gaulle did not have complete faith in what he considered a weakening American extended nuclear deterrence, and eventually concluded that France needed an independent nuclear arsenal with which it could defend itself.  De Gaulle chose to balance France’s U.S.- and UK-oriented Atlanticism with a European “Continentalism” that he defined as stretching from the Atlantic to the Urals.  He sought the closest possible ties with France’s old enemy, Germany, and held out the possibility of cooperation with Russia (de Gaulle never called it “the Soviet Union”).

It appears that Moon Jae-in has a similar instinct towards broadening the foundation of South Korea’s foreign policy stance.  He favors an enduring, close relationship with the United States, but also believes that South Korea could simultaneously have a positive relationship with China in a more closely integrated Asia, balancing a continuing U.S. Pacific-orientation with a new Asian “Continentalism” among countries of the region.  Continuing the parallel between the two presidents, Moon may view Japan with the same skepticism with which de Gaulle viewed the U.K., cooperating when in both countries’ interests but watching it with a wary eye. Though he doesn’t share de Gaulle’s uncertainty about the U.S. nuclear umbrella.

De Gaulle’s assertiveness in promoting what he perceived as France’s national interest sometimes strengthened and sometimes undermined American diplomacy. But, taking the long view, it also demonstrated that countries that share basic values regarding democracy, free markets, and human rights generally will support each other’s strategic direction and foreign policy interests — even if they disagree from time to time on specific policies.  Similarly, the U.S. government may not always agree with President Moon’s perception of South Korea’s national foreign policy interests.  This may not lead to the most comfortable kind of alliance, but it is still one that can endure, even beyond the temporary issues raised by North Korea.  It is worth recalling that throughout their long and sometimes awkward history, the United States has never been at war with France or with South Korea, a rare distinction.

Mark Tokola is the Vice President of the Korea Economic Institute of America. The views expressed here are his own.

Images from wikicommons and arif_shamin’s photostream on flickr Creative Commons.

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Korea Unveils Ambitious Plans for “Mooncare”

By Jenna Gibson

While the United States is locked in a fierce debate over Obamacare, South Korea is going through its own deliberations about healthcare reform. On August 9, right before hitting his 100th day in office, Korean President Moon Jae-In unveiled his plan to expand Korea’s already extensive healthcare system, a proposal quickly dubbed “Mooncare.”

Korea currently provides universal healthcare through its National Health Insurance Service. All citizens are required to pay into the fund via taxes, and they are all covered for general medical costs. Private insurance does exist, and people usually purchase those additional policies to cover large medical expenses, such as a major accident or cancer treatment.

One of President Moon Jae-In’s major pledges has been to reform this system, with the particular goal of decreasing costs for low-income patients. Moon’s plan focuses on three major changes: first, he wants to expand the types of procedures covered by the state insurance to eventually encompass all medical treatment except purely optional operations such as non-medically indicated cosmetic surgery. In addition, he plans to lower the cap for out-of-pocket expenses so that low-income Koreans would only have to pay up to 1 million won ($883) per year for their medical care. Finally, he plans to increase emergency financial support for those in the lower half of the income bracket, providing them access to up to 20 million won ($17,663) in case of a major health crisis.

“We will continue to move toward building a fair and just Republic of Korea that will ache when the people ache and will only smile when the people smile,” Moon said at the plan’s unveiling. “We will build a country where every person is free of concern over medical costs and can receive treatment for any disorder without having to worry about expenses.”

However, not everyone is enthusiastic about these sweeping changes. Korea will need 122,164 more nurses, 1,613 pharmacists, and 785 doctors to implement the president’s plan, according to a report from the Ministry of Health and Welfare. And critics have balked at the 30.6 trillion won ($26.9 billion) pricetag for the plan, saying that even if the government covers the increase for now, those costs may eventually be passed back down to taxpayers. This plan fits in with accusations that Moon is becoming a “Santa Claus President” – along with this healthcare plan, Moon has already promised several major welfare reforms including a minimum wage increase and a boost for both pension and child care funding.

Supporters, on the other hand, praise the program’s ambition and its focus on helping low-income Koreans. They also noted that this increased coverage could lead to a boom in the medical and biotech industry.

Moon’s approval rating has remained high, increasing slightly to hit 78 percent in the days following his healthcare announcement. According to a poll conducted on August 18-19, 85.3 percent of Koreans surveys said Moon was doing a good job managing state affairs. According to the Korea Herald, “When asked about having a ‘medium burden, medium welfare’ system in South Korean society, 81.6 percent supported the idea, with more than 75 percent of the respondents saying they are willing to pay more taxes to expand welfare and solve bipolarization issues.”

While Moon will have to carefully manage the significant funding necessary to conduct this and other major upgrades to Korea’s social safety net, it seems he has widespread support among the Korean public to begin moving forward with his ambitious reform agenda.

Jenna Gibson is the Director of Communications at the Korea Economic Institute of America. The views expressed here are the author’s alone. 

Image from Republic of Korea Armed Forces’ photostream on flickr Creative Commons.

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Presidential Puppies in the Blue House

By Juni Kim

South Korean President Moon Jae-in garnered attention last week with the announcement of the newest presidential resident, a rescue dog named Tory. President Moon adopted the four year old dog from the group Coexistence of Animal Rights on Earth (CARE), an activist organization which campaigns against the consumption of dog meat in Asia. In addition to Tory, President Moon already has two other pets, a rescue cat named “Jjing-jjing” and a Poongsan dog named “Maru.”

In a post on the Blue House’s Facebook page, President Moon encouraged other Koreans to adopt rescue animals, stating, “About one million animals find new owners, but 300,000 are abandoned each year. We need to pay more attention to abandoned animals and care for them as a society.”

The Blue House has a long tradition of presidential pets, with many past presidents showing a preference for Korean dog breeds. The graphic below shows some of the previous pet tenants that have provided company and friendship for South Korean presidents.

Puppies

 

Juni Kim is the Program Manager and Executive Assistant at the Korea Economic Institute of America. Hwan Kang, an intern at KEI, made contributions to this article. The views expressed here are the author’s alone.  

Graphic created by Juni Kim. Image from Korea.net. 

 

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One Small (and Medium) Step for Korea’s Economy

By Nathaniel Curran

The future of Korea’s economy may depend on SMEs (Small and Medium sized Enterprises) just as much as it does on the large traditional companies, the chaebol.

The Moon administration has already announced plans to boost support for SMEs, and while the success of the initiative remains to be seen, it raises important questions about the future of Korea’s economy.

Korea’s economy today is almost synonymous with the chaebol, the enormous, family owned and vertically integrated conglomerates that possess large market share in major global industries like shipping, electronics, and automobiles. In 2015, sales revenue from the five largest chaebol accounted for almost 60% of Korea’s GDP. Samsung and its subsidiaries alone account for roughly 20% of Korea’s economy.

It’s easy to understand the public and media fascination with the chaebol; they have been hailed as an important driver in South Korea’s rapid economic development, known as the “Miracle on the Han.” The seemingly symbiotic relationship between the chaebol and the government has been hailed as both dirigisme par excellence, and as crony capitalism. But regardless of one’s opinion of the chaebol, it’s undeniable that from their humble beginnings under Japanese colonial rule, the chaebol have shown remarkable resilience as the world has changed around them.

Perhaps the greatest threat to the chaebol’s survival came in 1997 during the Asian Financial crisis, during which 97% of chaebol went into bankruptcy. Despite the blame they attracted for causing the crisis, the chaebol emerged from the 1997 crisis largely unscathed. Although the subsequent IMF bailout led to significant restructuring, the chaebols’ modus operandi of family control, high debt ratio, and opaque operating structure remained largely intact. In fact, the chaebol were able to take advantage of IMF mandated restructuring to fire approximately 40% of their employees, who could then be rehired as part-time employees.

In the shadow of the Chaebol

However, the Western media’s focus on the power of the chaebol has served to obfuscate another important facet of Korea’s economy/economic development: SME’s (Small and Medium-sized Enterprises). While the chaebol have captured the lion’s share of attention -and treasure- in Korea, SMEs played, and continue to play, a vital role in Korea’s economic narrative.

Korea today boasts 3 million micro-enterprises (businesses that have fewer than 10 employees). Furthermore, SMEs account for roughly 37% of exports, which is especially impressive when one considers that fact that Samsung alone accounts for a whopping 30% of exports. Furthermore, employment continues to rise at SMEs, all the while accompanied by a growing popular sentiment that the interests of the Korean people are not being well served by the chaebol’s business activities.

The future of SMEs

SMEs may have found a champion in President Moon, who has repeatedly pledged to help spur entrepreneurship.  In this vein, the administration has already created a ministry for SMEs and startups. This is a promising sign, as the best way to deal with the chaebols’ stranglehold on the Korean economy might be less to attempt to reign them in than to directly support SMEs. After all, attempts to impose restraints on the chaebol have repeatedly failed, and despite Korea’s overreliance on exports, the chaebol likely will remain vital to a healthy Korean economy well into the future.

It in the present, it seems unlikely that Korea will be able to completely emulate Germany’s mittelstand (Germany’s innovative, tight-knit, and highly focused SMEs that play a leading role in the economy). That being said, diversification away from the chaebol would still be useful. For decades the chaebol enjoyed privileges and government support that make it difficult for SMEs to compete in today’s neoliberal environment of unregulated markets. Putting investment into SMEs would help spur innovation and much needed domestic competition. There is certainly widespread support for such measures, as the chaebols’ interests seem decreasingly to parallel state economic and social objectives.

It won’t be easy to steer Korea away from over-dependence on the chaebol, especially when the idea of working at a chaebol has become such a deeply ingrained dream for most young Koreans. Wages at the chaebol continue to outpace their SME counterparts. There are promising signs, however: not just the Moon administration’s investment plans, but also a burgeoning startup scene that may succeed in attracting more young talent away from traditional salary-man jobs at chaebol firms.

An SME revolution could be just what Korea needs to maintain its competitive edge in the global marketplace in the coming decades.

Nathaniel Curran is a PhD student at USC’s Annenberg School of Communication and a 2017 COMPASS Summer Fellow. The views expressed here are the author’s alone.

Photo from Yeseul Ko’s photostream on flickr Creative Commons.

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The North Korean ICBM Test: A Significant Step, But Still Just a Step

By Mark Tokola

It usually takes some time to figure out the details of what a North Korean missile test has accomplished – what type of missile it was, how it performed, its capabilities – but from the initial information regarding North Korea’s July 4th missile test, it appears that they have successfully tested an Intercontinental Ballistic Missile (ICBM).

The accepted technical definition of an ICBM is a missile that can travel 3,400 miles. The North Koreans test fired their missile to fly a short range but with a high trajectory; it landed off the west coast of Japan. If the trajectory was flattened out, the missile in theory could have flown over 4,000 miles, enabling it to reach Alaska but not the lower 48 states.

Conducting an ICBM test is a significant step in North Korea’s weapons program, but it is just a step. Kim Jong-un’s stated objective is to develop a reliable ICBM that can carry a nuclear warhead to the American homeland. The July 4th missile did not demonstrate that kind of range, and there is no evidence (yet) that North Korea has a nuclear warhead that could be carried by an ICBM. We shouldn’t downplay the significance of this test, but calling it a “game changer” may be an overstatement.

The true importance of the July 4th test is the timing – following a series of other missile launches in 2017, it is clear that North Korea is not slowing the pace of its quest for nuclear weaponry that can threaten the U.S. Further, Kim Jong-un has crudely described it as a “gift for the American b******ds,” implying it was timed for Independence Day. The language choice shows that the North Korean regime sees no hypocrisy in using such language about other countries while having a hair-trigger sensitivity to slights to its own national dignity. The test also comes on the eve of a G20 meeting, demonstrating North Korea’s desire to be in the international limelight.

Perhaps the most important fact about the timing of the North Korean ICBM test is that it comes on the heels of the first visit of new South Korean President Moon Jae-in to Washington, where he spoke clearly of his desire to engage North Korea in dialogue. If North Korea had any interest in demonstrating an openness to President Moon’s overture, it would not have conducted an ICBM test only days after President Moon’s public remarks. We should all hope that North Korea would be responsive to a South Korean initiative to defuse tension, but the July 4th test makes it hard to believe that there is any basis for that hope. North Korea seems unresponsive to China’s efforts to defuse tensions, and even less so to South Korea’s initiatives. North Korea seems single-mindedly focused on trying to acquire a reliable ability to credibly threaten the United States with a nuclear attack — truly a high stakes gamble on North Korea’s part.

Still, it is not too late for a diplomatic solution. That would be in the best interest of South Korea, China, Russia, Japan, the United States – and even for North Korea. That diplomatic path may be narrowing, and it will only be possible if South Korea, China, Russia, Japan, the United States, and others are able to maintain a common front against North Korea’s nuclear ambitions. There is some evidence that sanctions are beginning to bite – which may be also be contributing to Kim Jong-un’s rush. As the world’s leaders gather for the July 7-8 G20 summit in Hamburg, watch for signs of unity or division to see how the international community may handle this growing threat.

Mark Tokola is the Vice President of the Korea Economic Institute of America. The views expressed here are his own.

Photo from Stefan Krasowski’s photostream on flickr Creative Commons.

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The Son of Refugees who Became President of the Republic of Korea Visits D.C.

By Seung Hwan Chung

On December 19 1950, the SS Meredith Victory, a 7,600-ton merchant marine vessel, was about to leave from the North Korean port city of Hungnam. Hundreds of thousands of refugees flocked to the pier at Hungnam as the bombing of the Chinese army came closer. Leonard Larue, a U.S. Navy captain, made the decision to abandon almost all of the arms and military supplies from the ship and took on 14,000 evacuees in an operation code-named “Christmas Cargo.”

The parents of Moon Jae-in and his older sister were among the 14,000 refugees who fled aboard the Meredith Victory, arriving on Geoje Island in Gyeongsang Province on Christmas Eve. Moon Jae-in was born two years later on Geoje Island in January 1953. Thus, the son of a refugee from Hungnam became the 19th President of the Republic of Korea thanks to this successful rescue operation called the Hungnam Evacuation, which is credited by the Guinness Book of World Records as the largest transportation of evacuees in history.

In the lead-up to the evacuation, the 3rd U.S. Division was advancing northward from Wonsan to assist UN and South Korean forces trapped near the Chosin Reservoir. After losing Wonsan, the 10th U.S. Army Corps and the 1st Korean Army Corps had to withdraw to the sea as their retreat path was blocked, leading them to the port city of Hungnam. The first unit that withdrew from Hungnam was the 3rd Korean Division, followed by the 1st U.S. Marine Division.

According to the Korean Ministry of Patriots & Veterans Affairs, the Battle of the Chosin Reservoir is recorded as among the most brutal battles in the history of the U.S. Marine Corps. During the Battle, 15,000 U.S. marines fought through 120,000 Chinese soldiers in the extreme winter cold of -22 to -40 degrees Fahrenheit. As a result, 4,500 U.S. marines died and 7,500 were wounded.

President Moon Jae-in remarked on his family’s story at a reception for Korean War Veterans on  June 23, 2017, saying, “Today we are joined by the heroes of the Battle of Chosin Reservoir and the Hungnam Evacuation from North Korea. These two historic occasions became well known even to postwar generations in Korea who did not experience the war. The son of a refugee from Hungnam could become the President of the Republic of Korea and join you all today. I hope this fact helps make the Korean War veterans of the U.N. Forces feel a sense of delight and reward.”

President Moon Jae-in is scheduled to make a visit to Washington D.C. from June 28 to July 1 for his first summit meeting with U.S. President Donald Trump. As his first stop in the United States, he visited the new memorial for the Battle of the Chosin Reservoir at the National Museum of the Marine Corps in Quantico, Virginia on June 28. There, Mr. Moon laid a wreath before the memorial that commemorates the Korean War battle which enabled the evacuation of civilians.

The “Star of Koto-ri,” a symbol of the battle, is on the top of the monument. U.S. Marines started to wear the star to commemorate the bright stars they saw after a snowstorm before succeeding in the evacuation.

President Moon will also visit the Korean War Veterans Memorial in Washington D.C. along with Vice President Mike Pence, whose father was a Korean War veteran who was awarded a Bronze Star Medal for his service.

Additionally, Foreign Minister Kang Kyung-wha remarked on the Hungnam Evacuation during her visit to the U.S. 2nd infantry division base in Gyeonggi Province, stating “President Moon will invite Korean War veterans who participated in the Hungnam Evacuation” to the White House during the summit.

President Moon’s visit to the United States will lay the foundation for further upgrading South Korea-U.S. relations. The fact that the new Korean president is highlighting his family history and making a point to thank Korean War veterans throughout the trip can make the summit even more meaningful. Through the visit, the two heads of state can share a vision for further developing the Korea-U.S. alliance into an even greater one.

Seung Hwan Chung is a reporter with the Maeil Business Newspaper and a visiting fellow with the Korea Economic Institute of America. The views expressed here are the author’s alone. 

Image from USMC Archives’ photostream on flickr Creative Commons.

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The Peninsula blog is a project of the Korea Economic Institute. It is designed to provide a wide ranging forum for discussion of the foreign policy, economic, and social issues that impact the Korean peninsula. The views expressed on The Peninsula are those of the authors alone, and should not be taken to represent the views of either the editors or the Korea Economic Institute. For questions, comments, or to submit a post to The Peninsula, please contact us at ts@keia.org.