One of my nice new gigs in 2010 in Busan is a role as a ‘foreign affairs expert’ – please don’t laugh too much 🙂 – on a local English radio station. It is kinda flattering to be asked. The show is “Morning Wave” on Busan’s English language radio station. I speak on Monday mornings for about 8 minutes.
Today was my first contribution. I made a couple of quick predictions about Korea in 2010. The transcript is below. But here is the condensed version:
1. Korea will grow well, having sloughed off the Great Recession with little trouble.
Korea is a fairly small economy globally, even regionally. But it is fairly advanced, and it is a top 15 economy in GDP size. It is quite impressive how well Korea moved through the Great Recession. Unemployment did not spike. There was no capital flight, as there was in 1997. The contrast with the US is striking. There was a little nervousness last year, and the currency slipped for about 8 months as everyone sprinted to the dollar haven, but that’s it. Things never really got un-normal, in contrast to the West. There were not huge banking collapses, etc. So in 2009 things rolled along pretty smoothly, and they should in 2010.
2. The Korea-US free trade deal won’t go through.
What a shame. Just about every business and political official I know in Korea, from both countries, want the FTA to go through. But I don’t see any movement at all from the Democrats in Congress. The Great Recession stirred up all the old protectionist impulses of the Democratic Party. Hillary and Obama even competed to undo NAFTA. Amazing! The Democrats still haven’t made their peace with NAFTA 20 years later, so I see no trade deals at all going through this year. This is too bad, as the conservative Korean president could probably push the FTA through the legislature here if US movement was likely. Ironically that hurts us, the South Korean consumer more, because South Korea is a much more protected, and smaller, economy. Price differentials between foreign and domestic products are marked. The deal actually matters more here, but the US Congress cares more.
3. North Korea won’t change a bit.
NK is odd in so many ways. It is a closed to being a failed state, yet extraordinary stable for a stalinist hole. Everyone is terribly desperate to find change in NK. We look ceaselessly for any shred of movement, especially the doves who thought that putting it on the axis of evil was a mistake and that the sunshine policy was a good idea. But 10 years after sunshine, little has changed. NK is still the same awful repressive place it was, only now it is has nukes. We should stop predicting that NK is going to imminently collapse and strategize on those grounds, and we should start accepting that it has learned from the fall of communism in Europe and is going to hang around for awhile.
4. Japan won’t really come around on Korea.
This is probably the biggest disappointment coming to Koreans in 2009. The new, leftish Democratic Party of Japan government has really raised hopes in Korea for a meaningful apology (finally) over Japanese colonialism in Korea (1910-45) and a pro-Korean (naturally) settlement of a territorial issue (the Liancourt Rocks). The Lee government is even trying to finagle a Japanese Imperial visit. But I am with Jennifer Lind on this: the Japanese are just not there yet. The public doesn’t really care much about Korea, although Koreans care a great deal about Japan. Korean opinion is a nuisance most don’t care about; most voters want good relations with the US and China, which would compel Korea to come around anyway. But for the one group in Japan that really does think about Korea, it is firmly against the apology. Korea is ground zero for all the old rightist pretensions in Japan about WWII – that was defending Asia against the whites, that brought modernity to backward places, etc. To admit that Japanese was simply a rapacious colonialist here would definitively strip the Japanese right of a deep prejudice about Japan’s ‘proper’ place in Asia history. It will take more than the election of Hatoyama to get the Japanese to climb down from that one. But at least he is not visiting the Yasukuni shrine. That’s progress.
Petra (the host):
Hello everyone and welcome to …..
Today we have a new foreign affairs contributor at Busan e-FM. Dr. Robert Kelly teaches in the Political Science and Diplomacy Department at Pusan National University. He came to Korea about 18 months ago.
So good morning Professor Kelly. Please, tell us a little about yourself.
Good morning Petra. Let me first start by thanking you and the producers here at e-FM for inviting me. It’s an honor to speak on Busan’s only English radio station.
As for me, I am a professor of international relations at Pusan National University. I grew up in the US. I am originally from the city Cleveland in the state of Ohio. Cleveland lies about midway between New York City and Chicago, on the south coast of Lake Erie.
One of my areas of study is the foreign policy and political economy of northeast Asia, so I am happy to join the Busan e-FM team in that capacity.
Well, we’re happy to have you, and we hope are enjoying living in Korea.
I am indeed. I enjoy Korea very much. And Busan is wonderful place to live; the city is very vibrant and enjoyable.
That’s great to hear.
So let’s turn now a bit to the future. It is the first full week in 2010. Would you like to hazard any big predictions about Korea or East Asia in the coming year? We can always check up on them next year to see how you did.
Sure. Well, first, I would say, looking ahead, that Korea’s economy will almost certainly be a growth leader in Asia in 2010 – after China of course. Korea has done a remarkable job bouncing back from the nasty recession of the last 18 months. Economists are now calling this the ‘Great Recession.’ Korea’s performance through the Great Recession has in fact been extremely instructive, and it has justified many of the Seoul’s policies since the last big economic crisis in 1997-98, the Asian Financial Crisis.
That’s reassuring to hear. What did we do right that helped so much this time around?
Well, first, Korea’s growth is a lot more balanced now than it was a decade ago. In the 1990s, the large chaebol conglomerates like SK or Samsung represented a larger share of Korea’s economy. So when they had trouble, the whole Korean economy got in trouble too. They were, in the language of today’s Great Recession, ‘too big to fail.’ Today, small and medium enterprises are healthier and more diversified in Korea’s economy. This gives Korea some insurance if chaebol exports fall, as they briefly did last year.
Korea’s economy is also cleaner and more transparent than it was. Before the elections of the 1990s, Korea’s biggest companies had preferential and politicized access to national budget. This helped spur the reckless borrowing of the 1990s that fed the Asian financial crisis. This time around however, Korea’s biggest companies are more exposed to financial accounting standards, so there are no hidden ‘toxic assets,’ as in the US. In fact, it is ironic, that just as Korea learned and implemented good lessons from its 1990s crisis, the US ignored those same lessons, and we are seeing the fallout today. American unemployment is over 10%; Korea’s is somewhere around 4%. That is quite an achievement.
Hmm. It sounds like it. So much for Korea’s economy. I like those reassuring words. What about Korean foreign policy? There are a lot of big issues coming up, right? Like the FTA with the US, North Korean nuclear weapons, a reconciliation with Japan…
Yes, that’s right. 2010 has the potential to be a big year for the Republic of Korea. But here my predictions are gloomier.
First, on the FTA with the US, I must say that I cannot see it passing. The Korean National Assembly could probably be pushed into ratifying it, if the Blue House really thought the US was going to move on the treaty too. But quite honestly, this is unlikely. The American Democrats control both parts of the US Congress, as well as the White House. For several decades, the Democrats have been skeptical of the economic benefits of globalization, and I see no shift in that attitude. It is unlikely the US Congress will ratify the FTA.
But I thought the business communities in both Korea and the US really support the deal?
That’s right. They do. But that is just not enough. Globalization and trade are met with a lot of skepticism in the US right now, even towards close partners in Europe and Asia, like Korea. So I think the probability is low, and that means higher prices for all of us.
How about North Korea? Our previous foreign affairs expert, Brian Myers of Dongseo University, was pretty skeptical.
I am afraid I am too. Brian is right about most things North Korean. I share his pessimism.
Of course, we all hope for change in North Korea, but the regime has remained remarkably impervious to reform or renewal. Despite 20 years of hardship, including a brutal famine and Kim Jong Il’s stroke, the regime continues to hang on. I see no reason to expect that to change. In fact, the North’s nuclear weapons only serve to strengthen the government in this difficult period. So I see meaningful movement on the nuclear question as almost impossible. To me, the government’s repression and its nuclear weapons go hand-in-hand.
How unfortunate. How about Japan? President Lee extended an invitation to the Japanese emperor to come to Korea. That would be quite a breakthrough.
Your third issue – Korea’s relations with Japan – is the most likely for progress, but again I am pretty pessimistic. What Korea really wants from Japan is a sincere, heartfelt apology for the colonial period of 1910-1945, and an admission that Dodko is, in fact, Korean, territory.
I don’t see either as likely. Just in the last two weeks, another round of Japanese textbook reform missed the chance to narrow the distance. The election of the Democratic Party of Japan is a major event. It has promised better relations with Japan’s neighbors, and above all, that means Korea. But any apology, much less an imperial visit, will require a major shift in Japanese popular attitudes toward Korea. An election is simply not enough. And right now, the Japanese persist in old attitudes toward Korea, as a dependent or a little brother. Its apologies continue to be mixed and half-hearted. And they seem unable to formally relinquish claims to Dokdo, even though they already have in substance.
How gloomy for your first day on our show! Why did we invite you here? Can you at least close out with something positive?
Sure, I think the biggest under-appreciated international story in Northeast Asia is enduring peace. For all today’s troubles with China’s growth, Japan’s historical ambivalence, and North Korea’s nukes, East Asia is more peaceful now than it has been in centuries, and wealthier and more contented too. This is a huge achievement – bigger even than Yuna Kim. No one wants to jeopardize that, so one happy prediction for 2010 is the continuation of military peace and of economic growth, both in Korea and the region. This is a good time to live in East Asia. Enjoy it.