The Administration of Kim Young Sam (1993–1998)
The partnership was successful: Kim Young Sam was elected in late 1992 with slightly more than 40 percent of the vote and took office in February 1993. He was the second president in South Korea’s history to come to office in what is generally regarded as a free and fair election and the first person without a military background to be so elected. Almost immedi-ately he removed from key security positions several members of Chun’s old Hanahoe (“Club of One”) group that Roh had retained in office.
Loyal to his alliance, Kim resisted pressure to prosecute Chun and Roh for corruption, abuse of power, and their joint participation in the illegal coup that that brought Chun to power after Park’s assassina-tion. He argued that history would be their judge. In 1995, however, evidence surfaced that both former presidents had secret bank accounts worth hundreds of millions of dollars. Kim Young Sam arrested them for their bribe-taking and financial corruption.
While the men were in custody, activists pressed the government to bring charges of mutiny for the military revolt of December 12, 1979, and sedition for taking over the government by military force on May 18, 1980. Both men were tried on charges of corruption and murder in 1996. Chun was found guilty on all charges and sentenced to death. Roh was found guilty and sen-tenced to life in prison. After appeals the sentences were reduced to life for Chun and 17 years for Roh. In early 1998 they were both pardoned and released by the next president, Kim Dae Jung.
Apart from the trial of Chun and Roh, Kim Young Sam’s administra-tion was outwardly uneventful until his last months in office. Prosperity and continued economic growth were the order of the day. Kim’s five-year plan (1992–96) focused on high-tech fields, and its greatest con-cern was to transform the economy from one reliant on low wages to one based on innovative technology. Growth in South Korea, one of Asia’s mighty economic “tigers” in the parlance of the 1990s, continued to be strong, assisted by an enormous flow of funds by investors search-ing for the high rates of return that emerging markets offered.
However, as U.S. Federal Reserve Chairman Alan Greenspan would observe, “In retrospect, it is clear that more investment monies flowed into these economies than could be profitably employed at modest risk” (Nanto 1998). In 1997 South Korea, closely linked to the Asian regional economy and the worldwide financial system, fell prey to the financial contagion that began in Thailand in July 1997 and by November had spread to Indonesia, South Korea, and Japan.
Foreign investors began pulling their money out of Korea, lenders called in debts, and the finan-cial sector threatened collapse. To keep the economy afloat, South Korea needed bailout loans from the International Monetary Fund (IMF) totaling $57 billion, the largest loan the IMF had ever given. Usual IMF policy is that a member state can borrow five times the amount it pays into the fund. South Korea, however, needed to borrow 19 times this amount. Under the terms of the loans, several South Korean banks with high debts collapsed, as did several highly leveraged companies.
The financial crisis nearly bankrupted South Korea. One indicator of its severity was the won-to-dollar exchange rate. Before the crisis one U.S. dollar exchanged for about 800 South Korean won; after the col-lapse the exchange rate went as high as 2,000 won to the dollar before settling at around 1,200 won.
Another indicator was gross national product (GNP) per capita. In 1994 South Korea had just crossed the $10,000 threshold, a sign of prosperity in a developing nation. After the crash that figure fell to the $6,000 range. South Koreans blamed Kim Young Sam for failing to observe the critical foreign reserves and other economic indicators, and his administration left under a cloud of embarrassment: He had presided over one of the largest economic col-lapses in recent history.
The 1997 Election
In the presidential election held in December 1997, the major candi-dates were Kim Dae Jung, Kim Jong Pil, and the newcomer Lee Hoi Chang (b. 1935). Lee, a former judge and the head of the government’s audit bureau, was widely regarded as “Mr. Clean”—a man with a per-fect record. A scandal surrounded him anyway: He had two sons, and somehow neither had served in the military.
Both, though otherwise healthy, had been exempted from service on the basis of low body weight. In a country where the draft is universal, this smacked of privi-lege, if not abuse of power. Then, in a surprise move Kim Dae Jung made an alliance with Kim Jong Pil, his longtime rival. The unexpected move and Lee’s sudden embarrassment netted Kim Dae Jung the votes he needed.
Kim Dae Jung’s election in 1997 was a real milestone in South Korea’s democratic development. Syngman Rhee’s elections were tainted by American support and then by his own manipulation of the polls. Park Chung Hee and Chun Doo Hwan came to power by force. Roh Tae Woo, though popularly elected, built his political base on his associa-tion with Chun and their common military exploits.
Kim Young Sam had been a longtime opposition leader, but he was elected by defecting to the majority party, the party of the military. The election of Kim Dae Jung was the first peaceful transfer of power to the opposition party in South Korea’s history.