South Korea’s turn
COMMENT: Now its South Korea’s turn for some political turbulence, writes Mike Mundy.
We have seen Brexit open the door for the UK’s exit from the European Union and in the process divide the country. We have seen Trump be designated ‘President Elect’ and trigger protests across the US. And as PS goes to press, hundreds of thousands of Koreans are on the streets of the country’s capital, Seoul, demanding President Park Guen-hye resign in the wake of a political corruption scandal.
Ms Park will be the first sitting President to be questioned by prosecutors over a criminal case. Specifically, prosecutors will seek to establish whether she placed excessive influence on ‘chaebol’ bosses to generate funds for two foundations run by a friend of hers.
Prosecutors have already spoken on this subject to the heads of the Samsung Group, Hyundai Motor Group and the Hanjin Group, according to media sources in Seoul.
This, of course, is taking place against a background of the seismic failure of Hanjin Shipping, itself representing a structural change in South Korean Government policy.
At first it looked like the South Korean Government would do what it has traditionally done and support big business when Hanjin ran into trouble. The state-owned Korea Development Bank initially made available $910m in a bid to save the company. When, however, it became clear that this sum was nowhere near enough the South Korean Government did a U-turn and quickly terminated its financial support, effectively doing what it has not done before and thus leaving major question marks over the close relationship between big business and government which up until recently had underpinned South Korean economics.
Does this sudden casting adrift of Hanjin Shipping, a flagship South Korean company, signal an end to the traditional close ties between government and the larger ‘chaebols’, big family-owned industrial conglomerates?
At the very least, it has to be interpreted as a warning to Hanjin’s peers such as Hyundai and Samsung. And this comes at a time when significant challenges lie ahead in areas such as shipbuilding and shipping generally.
Political change of one sort or another looks set to drive fundamental changes in economic policy in South Korea just as it promises to in the UK and US.
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