Korea's Next Kim: a Unifier?

Kim Dae Jung, who becomes president in February, preaches unity for South and North.

In his first days as South Korea's president-elect, Kim Dae Jung is taking steps to reconcile South Koreans with themselves.

Today, the government is expected to release two former military rulers who are serving prison terms for orchestrating a coup in 1979, ordering a massacre of pro-democracy protesters a year later, and taking huge bribes from business leaders. Their 1996 trial was a vindication for pro-democracy activists - of whom Mr. Kim is first among equals in South Korea - but upset the nation's conservative elite, who have benefited from decades of pro-business dictatorship.

Kim has also spoken reassuring words to two groups of people he might like to ignore but cannot: the officials at the International Monetary Fund, who are organizing a $57 billion bailout of his country's battered economy, and his heavily armed and unpredictable communist brethren in North Korea.

Kim, who decided on the amnesty in a Saturday meeting with outgoing President Kim Young Sam, says he wants to promote national unity in a time of crisis. Indeed, analysts say the president-elect has several opportunities to promote reconciliation, both with North Korea and within his own country.

Improved relations?

Kim seems to have the best chance in years to bring calm to the Korean peninsula - a cold-war time warp where a demilitarized zone separates two hostile armies and where 37,000 US troops help defend the South. "He will really try to improve the atmosphere and the relationship," says a Western diplomat here who spoke on condition of anonymity. "It may be that North Korea is ready to do that."

North Korea watchers say the country may be preparing for a re-engagement with the South after years of caustic criticism of Kim Young Sam, South Korea's current leader. And the North has been relatively kind to Kim Dae Jung over the decades, since he too struggled against the South's military rulers. As the diplomat says, "it looks like the stars may be coming into line."

Kim Dae Jung himself emphasized the need to pursue a better relationship with the North in his first formal remarks as president-elect, suggesting he might seek an unprecedented summit with North Korea's leader.

While the international community might benefit from gentler North-South relations, Kim Dae Jung may see more pressing areas for reconciliation and unity within his own borders. Almost everyone agrees that South Korea must reform its economy in ways that will make many people poorer, after years of getting richer, and it will very likely cause social unrest.

The country turned to the IMF in November to forestall the possibility that South Korea would default on its international loans and thereby spread Asia's economic crisis to countries such as Japan and the United States. An economy that was founded on state-guided free enterprise, with government officials controlling how banks lend their money, has become unworkable amid intense global competition.

The result of South Korea's economic policy is a host of huge companies with too many employees and way too much debt. Many companies are either in or on the verge of bankruptcy. Economists say the solution will require a wholesale restructuring.

Accepting IMF reforms

In exchange for the financial help, South Korea must accept the advice of IMF economists, who are requiring changes that will make the country more market-oriented and force its companies to become leaner. Unemployment rates could triple next year, says Richard Samuelson, head of security brokers SBC Warburg Dillon Read's Seoul office. "The layoffs have to happen. It's only a question of how long they can be put off."

The problem is that South Korea has very little in the way of a social safety net. It also has powerful unions whose leaders can easily take to the streets. The combination could bring trouble and tear gas in the next months.

Kim, a longtime labor ally, hinted during his campaign that he might renegotiate the IMF deal. But he has been backpedaling ever since. In the days after his election, Kim reiterated his willingness to work with IMF officials. He has also asked South Koreans to prepare for hardship. "President-elect Kim has an opportunity to put an end to ... social divisions," says a former South Korean diplomat who preferred to speak anonymously. "A lot of poor people, ordinary Koreans, voted for him. His election understandably disturbs a lot of wealthy people and people of privilege, but he has an opportunity to reconcile the two."

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