South Korea cannot seem to stay out of the media. Whether it is a presidential impeachment, the US alliance or the misbehaving north—all eyes have been drawn to the Korean peninsula. On the 9th of May, the prying eye of the global media will once again be upon the nation when the people decide on who will be the successor of Park Geun-Hye. It is looking more and more like a two-horse race between front runners; Moon Jae-in of the Democratic Party and the Peoples Party’s Ahn Cheol-soo. While the two leading candidates differ in many policy issues such as; how to deal with the North, The US alliance, THAAD’s deployment and welfare spending— one area where the candidates do agree is breaking up the Chaebol business conglomerates. Contrary to many citizen’s hopes and desires, this is unlikely.
The months prior to Park Geun-Hye’s impeachment South Koreans went in droves to protest not only the former president’s dealings but also the entire politicised economy. For the ordinary citizen, the cosy relationship between government and big business is undemocratic, unlawful and has gone on for too long. From incidents of presidential pardons, bribes and perjury, the people are making a stand and both Moon Jae-in and Ahn Cheol-soo have listened.
Both candidates have been telling their supporters what they want to hear. Moon Jae-in has nicknamed his economic advisor as a 'Chaebol sniper'. In addition, in his campaign, he also stated that the government must cut links between politics and businesses and “eradicate” the deep-rooted Chaebol irregularities. While Ahn Cheol-soo has also vowed to tackle the Chaebol by creating a committee tasked with overhauling the government-Chaebol structure. These policies seemingly appease the resentment felt towards the businesses but the heirs of Samsung, Kia, LG, Lotte and Hyundai are unlikely to be shaking in their boots.
In their view, they have all the leverage. The top ten Chaebols control 80% of the South Korean Economy. It is the Chaebols who’s exports account for 82% of the nation’s output. It is the Chaebol who represent 50% of South Korea's Kospi index in terms of market value. It is the Chaebol who hire about 80% of new university graduates. Even since late October when the drama surrounding Park Geun-Hye and the Chaebol started to unravel the Chaebols collective stock price has not only risen but has outperformed the broader market. Clearly, they have the economic upper hand.
In contrast the future Korean president will have to face economic realities they cannot ignore. With youth unemployment at record high-levels, household debt levels rising to points not seen since the Asian financial-crisis, an already sluggish growth rate under further pressure, Chinese tourism restrictions and a shrinking population in need of welfare support—The new president, whoever it may be, will not be able to afford an economic misstep.
Considering these issues, the Korean government cannot really turn to many other places for solutions. With the global economy steadying and United States interest rates set to rise, the Bank of Korea cannot risk capital outflows by lowering interest rates. Moreover, The Korean government already has the fastest growing debt burden within the G-20 nations, which has been proven fruitless in stimulating growth. The new president simply cannot afford a row with the Chaebol for it could have dire economic consequences. And the Chaebol knows that. A source of one of the largest Chaebols told Reuters “We are deeply concerned about politicians riding on populism to push for changes without having a close look at the consequences, which would be unbearable.”
History too is on the side of the conglomerates. This isn’t new. The Chaebol have come under the reform buzz saw before, only to emerge bigger and stronger than ever. Park Geun-Hye swept to power last election promising company decentralisation and, look how well that went.
To deny the Chaebols strength is economic suicide but to deny the people’s desires is political suicide. Whoever will be the new Korean President undoubtedly has a tough job. They will have an unpredictable and dangerous neighbour in North Korea; they will have to walk a tightrope between the US military alliance and the Chinese economic alliance among many other challenges in the region. But the issue most likely to spoil their presidency will be the people’s desire to revolutionise a seemingly unalterable situation.
Carl Hemberg is an Economics and international relations major at Griffith University & Brisbane Project Officer for Young Australians in international affairs.